Chicago Fed president Austan Goolsbee doesn’t think a hot jobs report released Friday will alter the downward path of interest rates over the next 12 to 18 months.

"I don’t think that calculus changes," he said in an interview with Yahoo Finance.

By the end of 2025, "I think we will be a fair bit lower if conditions continue like this," he added.

The Fed last month cut rates for the first time in more than four years, starting with a jumbo-sized 50 basis point cut designed to get ahead of any weakness in the labor market.

Read more: Jobs, inflation, and the Fed: How they're all related

But new data out Friday from the Bureau of Labor Statistics showed new strength instead. The labor market added 254,000 payrolls in September, more than the 150,000 expected by economists. The unemployment rate also fell to 4.1% from 4.2% in August.

But Goolsbee declined to say whether he believes a central bank estimate of smaller cuts in November and December still holds, preferring instead to argue that the longer-term outlook for reduced rates remains the same in his mind.

Fed policymakers last month estimated as a group that the central bank would pull the trigger on two more 25 basis point cuts in 2024, followed by four smaller cuts in 2025.

The bulk of the Fed’s rate-setting committee, Goolsbee noted, views rates eventually settling in a range of 2.5%-3.5%, down from today's range of 4.75% to 5.00%.

That analysis, he said, still "feels right to me."

However, he noted the pace with which the Fed gets to that level will hinge on economic conditions and whether there will be any surprises that could jolt the economy or inflation, including how much oil prices run up following more unrest in the Middle East.

"External shocks like that have derailed many a soft landing in previous times. And we've got to be attuned to all of those conditions before we can answer that," he said.

But if unemployment settles in the low 4% range while inflation simultaneously comes down to the Fed’s 2% goal, it would give Goolsbee more confidence that recession risk has lessened.

"It would give me more comfort that we are achieving exactly where we want to be," he said.

Other Fed watchers argued Friday that the new jobs report may change the calculus of the Fed in the near term. The odds of a bigger 50 basis point cut in November plunged Friday.

"I think this pushes the Fed out a lot," said Peter Tchir, Academy Securities head of macro strategy, while noting it could elevate central bank concerns about inflation.

"I don’t know whether we get 50 this year even now," he added. "Maybe 25 in November, but this may give them pause."

Robert Sockin, Citi senior global economist, said the Fed is now likely to stay with smaller 25 basis point moves for now.

"It’s hard to see a lot of urgency to go as fast as they did at the September meeting," he added.

Fed Chair Jerome Powell indicated earlier this week that the central bank's rate-setting committee expects to continue reducing rates at a measured pace.

"This is not a committee that feels like it is in a hurry to cut rates quickly," Powell said Monday during an appearance before the National Association for Business Economics annual meeting in Nashville.

He also reiterated that the consensus of Fed officials outlined at the September meeting was for two more 25 basis point rate cuts this year.

“It wouldn't mean more fifties,” Powell said.

If the economy slows more than expected, however, the committee can cut faster, he added.

"We will do what it takes in terms of the speed with which we move," he said.

The Fed has one more jobs report to digest just before the central bank’s Nov. 6-7 meeting.

It could show weaker job gains, albeit temporarily, depending on a machinists strike that halted production of Boeing (BA) planes in the Pacific Northwest and the unfolding impact of Hurricane Helene. A dockworkers strike affecting ports from Maine to Texas risked a bigger impact before Friday's return to work.

JPMorgan economists estimate shutting down the East and Gulf Coast ports could have an economic impact of between $3.8 billion to $4.5 billion per day, some of which would be recovered after a return to normal operations over time.

Thursday's deal to suspend the union walkout eases that risk.

JPMorgan chief economist Michael Feroli said in a note that a soft landing for the economy is now back in sight.

"The September report generally reversed many of the cooling trends that had been apparent in various measures of labor market activity," he said. "That cooling had threatened to turn into something more worrisome, but after today’s report the soft landing looks back on track."

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