Chicago Fed President: If inflation falls back toward the target, further rate cuts could be considered, but that is not the case.

On Friday, Chicago Federal Reserve Chair Austan Goolsbee stated that if inflation is moving back toward the 2% target, the Federal Reserve could further cut interest rates, but that is not the case at the moment.

Goolsbee said, “I believe interest rates can be lowered further from current levels — possibly even a few more times. But the condition is that inflation needs to return to the path toward 2%. Currently, we are not on that path. Inflation is roughly stuck around 3%, which is unacceptable.”

A report released earlier on Friday showed that U.S. service prices accelerated in January, and Goolsbee reiterated his ongoing concerns about service sector inflation. Overall prices increased by 2.4% year-over-year, below expectations.

After three consecutive rate cuts at the end of last year to address soft labor market hiring, Federal Reserve officials decided to hold rates steady at their meeting last month. Goolsbee and some of his colleagues indicated that the labor market currently appears more stable, and more progress on inflation is needed before supporting further rate cuts.

A report released earlier this week showed that employment growth in January remained steady.

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