CHICAGO- (December 12, 2025) – At the December 10 Federal Open Market Committee meeting, I dissented on the decision to cut the federal funds rate. While I voted to lower rates at the September and October meetings, I believe we should have waited to get more data, especially about inflation, before lowering rates further.

Waiting to take this matter up in the new year would not have entailed much additional risk and would have come with the added benefit of updated economic data which have been absent lately. Given that inflation has been above our target for four and a half years, further progress on it has been stalled for several months, and almost all the businesspeople and consumers we have spoken to in the district lately identify prices as a main concern, I felt the more prudent course would have been to wait for more information.

If the labor market were deteriorating rapidly, it would be a different calculation. But most of the data we have show stable economic growth with a labor market only moderately cooling and with measures comparable to those in previous expansions. An environment that can be characterized as “low hiring/low-firing” is more consistent with businesses dealing with continued uncertainty than it is with a conventional business cycle slowdown. At the least, there is little to suggest a deterioration of the labor market so rapid that we could not have waited for the data to come in the early months of next year before deciding to act.

Fundamentally, the elevated inflation may have come mainly from tariffs and may quickly prove transitory. The danger, of course, is either the tariff inflation proves more long-lasting than we currently forecast or that inflation in more persistent categories like non-housing services remains too high or gets worse. Before the data went silent, there were some concerning readings. Fortunately, we will find out important information about these risks over the next few months and, hopefully, that can provide confidence we are on a path back to 2% inflation.

I remain optimistic that interest rates can come down a significant amount over the next year. As I have reiterated for months, my unease is about too heavily front-loading rate cuts and just assuming that inflation will be transitory. Given the last several years, getting more evidence first feels like the wiser choice.

Note: Opinions expressed in this article are those of Austan Goolsbee and do not necessarily reflect the views of the Federal Reserve Bank of Chicago or the Federal Reserve System.