{"id":58652,"date":"2026-02-17T10:38:30","date_gmt":"2026-02-17T14:38:30","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/feds-goolsbee-signals-2026-rate-cuts-as-german-recovery-falters\/58652\/"},"modified":"2026-02-17T10:38:30","modified_gmt":"2026-02-17T14:38:30","slug":"feds-goolsbee-signals-2026-rate-cuts-as-german-recovery-falters","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/feds-goolsbee-signals-2026-rate-cuts-as-german-recovery-falters\/58652\/","title":{"rendered":"Fed\u2019s Goolsbee Signals 2026 Rate Cuts as German Recovery Falters"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>Chicago Fed President Austan Goolsbee projects &quot;several more&quot; interest rate cuts in 2026<\/strong>, identifying <strong>3%<\/strong> as a &quot;loose&quot; estimate for the neutral policy rate.<\/li>\n<li><strong>German investor confidence unexpectedly declined in February<\/strong>, with the <strong>ZEW Indicator of Economic Sentiment<\/strong> falling to <strong>58.3<\/strong>, well below the anticipated <strong>65.0<\/strong>.<\/li>\n<li><strong>Inflationary pressures remain uneven<\/strong>, as Goolsbee noted that goods with <strong>higher tariffed content<\/strong> are seeing larger price increases while <strong>services inflation<\/strong> remains &quot;not tame.&quot;<\/li>\n<li><strong>ECB&#39;s Boris Vujcic emphasized flexibility in monetary policy<\/strong>, stating that the definition of the &quot;medium term&quot; for inflation targets depends entirely on the specific <strong>shocks<\/strong> the central bank faces.<\/li>\n<li><strong>Pentagon leadership remains in flux<\/strong> following reports that Defense Secretary <strong>Pete Hegseth<\/strong> ordered the removal of high-ranking personnel, including <strong>Col. Dave Butler<\/strong>.<\/li>\n<\/ul>\n<h2>Fed Outlook: Goolsbee Eyes 3% Neutral Rate<\/h2>\n<p>Federal Reserve Bank of Chicago President <strong>Austan Goolsbee<\/strong> signaled a dovish outlook for 2026 during an interview with CNBC (<a href=\"\/stock\/CMCSA\">CMCSA<\/a>). Goolsbee stated that if inflation continues its descent toward the <strong>2% target<\/strong>, the central bank could implement <strong>&quot;several more&quot; rate cuts<\/strong> throughout next year. He specifically identified a <strong>3% policy rate<\/strong> as a &quot;loose&quot; target for the neutral rate, suggesting that current levels remain restrictive.<\/p>\n<p>Despite his optimism for future cuts, Goolsbee warned that <strong>services inflation<\/strong> has not yet been fully tamed. He also highlighted a direct correlation between <strong>trade policy and consumer prices<\/strong>, noting that goods with higher <strong>tariffed content<\/strong> have tended to see more significant price hikes. Additionally, Goolsbee expressed strong support for Fed Chair nominee <strong>Kevin Warsh<\/strong>, citing their collaborative history during the <strong>Great Financial Crisis<\/strong>.<\/p>\n<h2>German Sentiment Hits &quot;Fragile&quot; Recovery<\/h2>\n<p>Economic sentiment in Europe\u2019s largest economy took a surprise hit this month, according to the latest <strong>ZEW<\/strong> report. The <strong>Indicator of Economic Sentiment for Germany<\/strong> slipped to <strong>58.3<\/strong> in February, down from <strong>59.6<\/strong> in January. This result significantly missed market expectations of <strong>65.0<\/strong>, leading analysts to describe the current German recovery as <strong>&quot;fragile&quot;<\/strong> amid persistent structural challenges in industry and private investment.<\/p>\n<p>While the overall sentiment cooled, certain export-oriented sectors showed resilience. The <strong>chemical and pharmaceutical<\/strong> industries, along with <strong>mechanical engineering<\/strong>, reported moderate gains due to strong order intakes at the end of 2025. Conversely, sentiment in the <strong>banking, IT, and insurance<\/strong> sectors deteriorated, reflecting broader concerns about the European financial landscape.<\/p>\n<h2>ECB and Geopolitical Developments<\/h2>\n<p>In the Eurozone, <strong>Boris Vujcic<\/strong>, Governor of the Croatian National Bank and ECB Vice-President nominee, provided insight into the central bank&#39;s framework. Vujcic noted that the <strong>&quot;medium term&quot;<\/strong> horizon for achieving price stability is not a fixed window but varies based on the nature of the <strong>economic shocks<\/strong> the ECB encounters. This suggests the ECB will maintain a data-dependent and flexible approach to interest rate adjustments as it balances growth risks against inflation.<\/p>\n<p>Domestically, the U.S. defense sector is monitoring a leadership shake-up at the Pentagon. According to reports from Fox News (<a href=\"\/stock\/FOXA\">FOXA<\/a>), Defense Secretary <strong>Pete Hegseth<\/strong> has ordered Army Secretary <strong>Dan Driscoll<\/strong> to remove <strong>Col. Dave Butler<\/strong> from his post. This move is seen as part of a broader effort by the new administration to reorganize key personnel within the Department of Defense, potentially impacting future military communications and strategy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Chicago Fed President Austan Goolsbee projects &quot;several more&quot; interest rate cuts in 2026, identifying 3% as a &quot;loose&quot; [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":50383,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"rank_math_schema_Article":[],"rank_math_focus_keyword":[],"rank_math_description":[],"financial_data_references":[],"stock_symbols_mentioned":[],"footnotes":""},"categories":[5012],"tags":[2004,4037,4179,4223,5072,5080,5323],"class_list":["post-58652","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-breaking-news","tag-usd","tag-ecb","tag-tariffs","tag-inflation","tag-germany","tag-eur","tag-federalreserve"],"_links":{"self":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/58652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/comments?post=58652"}],"version-history":[{"count":0,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/58652\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/media\/50383"}],"wp:attachment":[{"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/media?parent=58652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/categories?post=58652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/wp-json\/wp\/v2\/tags?post=58652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}