Goolsbee’s cautious optimism kept mortgage markets guessing on how far rates could fall
Federal Reserve Bank of Chicago president Austan Goolsbee put the prospect of “several more” interest‑rate cuts back on the table for 2026, but only if inflation convincingly heads toward the central bank’s 2% target.
Speaking on CNBC, Goolsbee downplayed January’s softer‑than‑expected consumer price reading, warning that base effects flattered the headline number while services inflation remained stubborn.
He said goods with higher tariff content tend to see bigger price hikes and argued that the United States economy has “basically been stalled out around 3%” inflation.
“I do think that if this proves to be transitory, and we can show that we’re on path back to 2% inflation, I still think there’s several more rate cuts that can happen in 2026, but we’ve got to see it,” Goolsbee said.
“I want some evidence that we’re headed back to 2%, and then I think rates can keep coming down,” he said.
Sam Williamson, Senior Economist at First American, and Stephen Kates, Financial Analyst at Bankrate, both highlight how easing inflation could modestly lower mortgage rates and brighten affordability heading into the spring homebuying season.https://t.co/9C5utQSUqZ
— Mortgage Professional America Magazine (@MPAMagazineUS) February 13, 2026
Goolsbee, who is not a voting member of the Federal Open Market Committee this year, described a 3% policy rate as a “loose target” for neutral – a level that would imply two or three additional quarter‑point cuts if inflation cooperated.
At their January meeting, Fed officials held the benchmark federal funds rate in a 3.50%–3.75% range after three straight reductions late in 2025, even as payroll growth surprised to the upside and the unemployment rate dipped.
Hedge fund manager David Einhorn argued that the Fed would end up cutting “substantially more than two” times.
Brokers similarly stressed psychology alongside pricing. “Rates are more likely to ease modestly than to rise sharply,” Jay Lessard of Sonoran Lending told Mortgage Professional America. “I believe we’ll see peaks and valleys throughout the year, which could be positive for those working with a professional who’s in tune with the market.
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