Rate Cuts Must Wait Until Price Pressures Ease, Fed's Goolsbee Says 3% Inflation "Not Good Enough"

The Federal Reserve cut interest rates three times in the latter part of 2025, but inflation remains stubbornly above its 2% target. The most recent data for December showed core inflation which excludes food and energy running at 3%, up 0.2% points from November, led by pressures in the service sector and persistently high housing costs unrelated to tariffs. On Tuesday, Chicago Fed President Austan Goolsbee told the National Association for Business Economics that rate cuts are not appropriate until inflation clearly heads back toward 2%. "Stalling out at 3% is not a safe place to be," he warned. Markets currently price in roughly a 50% chance of a cut in June and a 71% probability in July, according to CME Group's FedWatch tool.