Investing.com -- Chicago Fed President Austan Goolsbee on Friday welcomed the softer inflation data this week, but insisted that further evidence of slowing inflation in the months ahead would pave the way to rate cuts.
"if we keep making progress on inflation, and the rates can come down, we may avoid recession," Goolsbee told the Iowa Farm Bureau Economic Summit in Ankeny, Iowa on Friday, following data earlier this week showing deeper slowing of inflation in May.
Data earlier this week, showed the consumer price index slowed to 0% in May from 0.3% in April, taking the annualized reading through May to a 3.3% pace, down from 3.4% in April.
The inflation was "very good," Goolsbee said. "If we get more months like we just saw on inflation, Fed can cut rates," he added.
The remarks comes just days after the Fed left interest rates unchanged, but in a bearish surprise, central bank members signaled that only one rate hike for the year, down from three previously.
The Chicago Fed chief also downplayed the recent upside surprise in payroll gains for May, and pointed to other measures that showed some weakening in the labor market including unemployment rate, quits rate, and vatio of vacancies to the number of unemployed workers.