Chicago Fed’s Goolsbee Says Tariffs’ Economic Impact Modest, Rate Cuts Possible

Federal Reserve Bank of Chicago President Austan Goolsbee recently stated that the impact of recent tariff increases on the U.S. economy has been more modest than initially expected, with inflation remaining subdued despite earlier concerns. He emphasized that if inflation does not rise due to tariffs, the economy remains on a stable "golden path" characterized by steady employment and inflation moving toward the 2% target. Goolsbee noted that tariff effects on price pressures have been less immediate and less severe than in the past, suggesting the economy has adapted with minimal disruption. This outlook opens the possibility for the Federal Reserve to resume interest-rate cuts, although the exact timing remains uncertain. He also indicated that if inflationary pressures remain low and the economic "dirt" caused by tariffs clears, the Fed should proceed with easing monetary policy toward lower rates. Overall, Goolsbee’s comments align with broader data showing resilience in the global economy and suggest a more tempered economic impact of tariffs than feared.