Chicago Fed President Expresses Concerns Over Tariffs Impact

In a recent interview with The New York Times, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, highlighted the ongoing risks of stagflation posed by tariffs and policy uncertainties under the Trump administration.

Temporary Trade Deal Offers Limited Relief

While acknowledging the positive step of the US-China agreement to temporarily ease tariffs, Goolsbee pointed out that the remaining tariffs are significantly higher than pre-trade war levels. He emphasized that these could dampen economic growth and increase prices, despite the recent truce.

Fed's Cautious Stance on Interest Rates

As a voting member of the Fed this year, Goolsbee stressed the importance of monitoring inflation expectations and labor market conditions before making any interest rate decisions. "Stagflation is a very uncomfortable situation for a central bank," he remarked, advocating for a cautious approach amidst high uncertainty.

He suggested that if the current economic confusion subsides, there might be room for rate reductions, but only under clear and favorable conditions.