Fed's Goolsbee emphasizes cautious approach amid economic uncertainty

Austan Goolsbee, President of the Federal Reserve Bank of Chicago, addressed the Economic Club of New York, highlighting the importance of a cautious approach in the current economic climate. He emphasized that while the economy shows positive indicators like low unemployment, uncertainty surrounding U.S. trade policy and tariffs poses significant challenges. Goolsbee described tariffs as a stagflationary shock that complicates the Fed's policy response, noting there is no generic playbook for such scenarios. He suggested that if current uncertainties are resolved, interest rates could potentially be lower in the next 12 to 18 months. Goolsbee also pointed out that the Fed's timeline may not align with market expectations, urging a 'wait and see' approach to monetary policy adjustments. The need to monitor both hard and soft economic data has become increasingly critical as the Fed navigates these complexities.