Federal Reserve member Goolsbee talks about the timeline for reaching the neutral interest rate.

During his talk on Friday, Federal Reserve Bank of Chicago member Austan Goolsbee discussed monetary policy and his expectations for the Federal Open Market Committee's moves until reaching the neutral interest rate, with his key statements including:

• We definitely need to monitor long-term interest rates.
• The Federal Reserve needs to understand why 10-year interest rate expectations are rising and keep an eye on long-term interest rates.
• Expectations now suggest that the timeline for the Federal Reserve to reach the neutral interest rate may extend to 12 to 18 months.
• This timeline is particularly interesting as it reflects expectations that the process of lowering interest rates may be much slower.
• I don’t think we are near the neutral level right now.
• The core Personal Consumption Expenditures (PCE) price index is still extremely high.
• If there is disagreement about the neutral rate, it makes sense to begin slowing the pace of interest rate cuts.
• The baseline expectations for the economy remain lower inflation, a slowing labor market, and full employment.
• I don’t believe prices will return to what they were before the pandemic.