Chicago Fed President Warns Tariff Uncertainty Delays Rate Decisions Amid Stagflation Risks

Chicago Federal Reserve President Austan Goolsbee has expressed concerns that President Donald Trump's volatile tariff policies are creating uncertainty that is likely delaying interest rate decisions by the Fed. Goolsbee warned that tariffs could lead to stagflation, a difficult economic scenario characterized by stagnant growth, high inflation, and unemployment, which would be the central bank's worst case. He emphasized that while all options remain on the table, the Fed is raising the bar for action until there is more clarity on trade policies. Despite the near-term caution, Goolsbee remains optimistic that borrowing costs could be significantly lower in 10 to 16 months. The ongoing tariff threats, including a potential 50% tariff on EU products and 25% tariffs on iPhones, have unsettled markets and complicated the Fed's policy considerations. Goolsbee noted that businesses are pausing investment decisions amid the unpredictable trade environment, highlighting the importance of policy consistency.