Federal Reserve's Goolsby: It's too early to cut rates based on expectations of increased productivity; rates will only be cut when inflation falls.

Federal Reserve Chairman John Goolsby stated that it is too early to bet that productivity gains will suppress inflation, and that interest rate cuts are only appropriate when inflation declines. Goolsby indicated that he expects a rate cut this year, but only if inflation returns to the Fed's target level. The downward trend in inflation has stopped, core services inflation (excluding housing) remains stubbornly high, and he is unsure whether current interest rates are restrictive, thus requiring the Fed to remain vigilant. Premature rate cuts based on expectations of productivity gains could lead to an overheated economy. Regarding the labor market, Goolsby believes the current low hiring and low layoffs are driven by uncertainty that may persist following the Supreme Court's ruling on tariffs. However, he believes current economic growth and the labor market are not fragile. Regarding the Fed's balance sheet, similar to Fed Governor Waller's remarks, Goolsby stated that any discussion about returning to a scarce reserve system requires further examination of its pros and cons. (Jinshi)