MNI BRIEF: No Tariff Inflation Could Mean Fed Cuts - Goolsbee

The Federal Reserve could resume cutting interest rates if expectations for tariffs to lead to price rises do not materialize soon, Chicago Fed President Austan Goolsbee said Monday. 

Goolsbee said he’s been surprised at the absence of any inflation spikes since tariffs were first announced in April. 

“That kind of wasn’t on the bingo card. That might just be a short-run phenomenon. If we do not see inflation resulting from these tariff increases, then in my mind, we never left what I was calling the golden path” of easing inflation with stable, low unemployment," he said at a business event in Milwaukee, Wisconsin.

If that’s the case, “we should be moving toward where we think rates are going to be settling, which is a fair bit below where they are today.” (See MNI INTERVIEW: Fed Will Face Tough Calls In H2-Holtz-Eakin)