Federal Reserve Bank of Chicago President Austan Goolsbee says he expects interest rates to decrease but cautions more clarity on inflation is needed.
Speaking to hundreds of business leaders at a Milwaukee Business Journal Mid-Year Outlook event, Goolsbee addressed the pressing question on many minds: When will interest rates go down?
"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," Goolsbee said.
Watch: Federal Reserve's Goolsbee talks interest rates, impact of tariffs while in Milwaukee
The Fed official noted that while inflation appears to be moving in the right direction and unemployment remains stable, recent tariff discussions have given him pause.
"I expect rates to go down from where they are now, by a fair amount but we just have to be sure we are not going back to unfavorable conditions," Goolsbee said.
As one of 12 voting members who help set the nation's monetary policy, Goolsbee expressed particular concern about tariffs' impact on manufacturing-dependent states like Wisconsin.
"If you look at the most exposed states to tariffs - four of the seven most exposed states are in the Chicago district - including Wisconsin, I think Wisconsin is number four or five," Goolsbee said.
But he added: “Somewhat surprisingly, thus far, the impact of tariffs has not been what people feared.”
Goolsbee also addressed political pressure from former President Trump to cut rates immediately, emphasizing the importance of the Federal Reserve's independence.
"It is basically unanimous among economists that central bank independence from political interference is critically important," Goolsbee said.
During his Wisconsin visit, Goolsbee also made stops at SC Johnson and Molson Coors to discuss how these companies are navigating the current economic landscape.
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