FILE PHOTO: Austan Goolsbee, president of the Federal Reserve Bank of Chicago, speaks at the Stanford Institute for Economic Policy Research (SIEPR) Economic Summit in Palo Alto, California, U.S., February 28, 2025. REUTERS/ Ann Saphir/File Photo

By Ann Saphir

(Reuters) -Chicago Federal Reserve President Austan Goolsbee on Thursday said he is uneasy about cutting interest rates in the face of too-high inflation that's steady at best and by some measures getting worse, remarks that signal a reluctance to support a third straight reduction in borrowing costs next month.

"My unease is about the short-run front-loading of too many rate cuts and counting on ... the inflation uptick that we've seen being transitory," Goolsbee told reporters in a virtual interview. "I'm not hawkish when it comes to rates over the medium term: I think rates are going to go down, can go down, (but) we've just got to get through this period."

Fed Chair Jerome Powell leads a U.S. central bank that is deeply divided between those who feel a cooling labor market could get far worse without lower rates, and those who feel that the more immediate concern is inflation. Several Fed policymakers have signaled they would oppose leaving rates on hold, as financial markets currently expect; several others have said they would oppose another rate cut.

Goolsbee this year is one of the Fed's 12 rate-setting voters, and he voted with the majority in both September and October to reduce short-term rates to keep the labor market from weakening further.

On Thursday he told reporters that after the September rate reduction, he felt the Fed would need to make only one more cut by the end of the year. By October, when he voted for the second rate cut that brought the policy rate range to its current 3.75%-4.00% level, he said he thought that - even without official data during the U.S. government shutdown - the labor market was probably pretty steady and cooling only gradually.

The September jobs report, published on Thursday after a month-and-a-half delay, bore that presumption out, he said.

Goolsbee added that he remains worried about the increase in services inflation, as tracked by data published before the shutdown, and is concerned about the lack of inflation data since then, as there are few non-official sources of reliable data on prices.

The government won't publish an update on inflation until the second day of the Fed's December 9-10 policy meeting, and will not publish another comprehensive job market report until a week later.

Goolsbee says those developments leave him unsettled about the upcoming Fed rate decision.

"There is some value to the Powell approach of, can we build a consensus that everyone, or a lot of people, can agree with," Goolsbee said. "But if I end up feeling strongly one way and it's different from what everybody else thinks, then that's what it is ... I don't think that there's anything wrong with dissenting."

(Reporting by Ann Saphir; Editing by Paul Simao)