(Reuters) – Further progress on beating back inflation will be the decisive factor in any Federal Reserve decision next year to reduce interest rates, Chicago Federal Reserve Bank President Austan Goolsbee said on Tuesday.
“If inflation continues to come down to target, then the Fed can reconsider how restrictive it wants to be,” Goolsbee said in an interview on Fox News. The stock market, which surged after Fed Chair Jerome Powell last week signaled that rate hikes are likely over and rate cuts may be next, “got a little ahead of themselves” with “euphoria” over the thought of Fed interest-rate cuts, Goolsbee said, adding that the U.S. central bank won’t be “bullied” by markets. The decision is also “not about politics,” he said, responding to the suggestion that the Fed would cut rates to help President Joe Biden’s reelection prospects.