FED: Chicago's Goolsbee: EU Tariff Threat Scary, Still See Lower Rates End-2026

Chicago Fed President Goolsbee (2025 FOMC voter, dove) tells CNBC that the latest tariff threat of 50% rates on the EU is "really scary" for US supply chains, and he reiterates previous language in saying that the bar for adjusting rates remains high so long as uncertainty persists.

• Asked about his current rate cut view, Goolsbee says: "as we went into April 2nd...I thought over the next 12-18 months rates could come down a fair amount toward where the Dot Plot said they would settle". Goolsbee now says that timeline is "10-16 months" - implying that his view that rates would drop to near neutral by late 2026 hasn't really changed.
• On rising Treasury yields and their impact on the economy and thus Fed policy: "To the extent that conditions are getting tighter in long end rates, that does affect investment decisions [earlier in the interview he'd noted that tariff uncertainty had businesses postponing decisions] ... I would think we would want to factor that in, into if there will be a slowdown" - though he notes that, on the other hand with fiscal stimulus, the Fed has to consider that economic impact too.
• Says that amid recent market volatility, financial stability concerns are "overblown"... says if there was really a lack of confidence in the US's fiscal position, "rates would be well higher than they are now" and the move higher in Treasury yields so far has been relatively orderly.