Fed's Goolsbee warns that new tariff threats could hamper rate cut hopes

In an interview with the Wall Street Journal, Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee warned that ongoing trade policy at the hands of Trump's constant tariff threats could hamper the ability of the Fed to deliver interest rate cuts that both the broader market and Donald Trump himself want to see.

Key highlights

New tariffs unveiled by Trump have further muddied the inflation outlook, making it more difficult for me to support the rate cuts that the president has pressed for.

Over the past few months, after Trump paused the steep bilateral tariffs he proposed in April, anxiety about how tariffs could push up prices calmed substantially. That had put the Federal Reserve on track to ease interest rates again soon.

But the latest round of tariffs could spark fresh concerns about inflation, which might force the Fed to maintain its wait-and-see posture until the central bank gets more clarity.