Chicago Federal Reserve Bank President Austan Goolsbee said Monday that he still expects the U.S. central bank to lower short-term interest rates—once the uncertainty surrounding recent tariff policies subsides.
“If we can get through this rocky patch, the dual mandate is actually looking pretty solid,” Goolsbee said during a webcast interview with the Quad Cities Regional Business Journal in Davenport, Iowa. The Fed’s dual mandate focuses on achieving both full employment and stable prices. Goolsbee noted that if the economy stays on track and the tariffs announced on April 2 don’t prove as severe as initially feared, the Fed’s policy rate could be “a fair bit” lower within the next 15 months.
He pointed out that the labor market remains strong and April’s inflation data—showing a 2.1% year-over-year increase in the personal consumption expenditures (PCE) price index—was encouraging.
However, Goolsbee cautioned that current inflation figures likely haven’t yet captured the effects of the new tariffs.
“Personally, I’m a bit hesitant,” he admitted, referring to the risk of underestimating the impact of the tariffs. He recalled how, in the aftermath of the pandemic, the Fed misjudged inflation as transitory—only to see it surge to 40-year highs, prompting aggressive rate hikes in response.
Federal Reserve Governor Christopher Waller also said Monday that the central bank will likely be able to lower interest rates later this year, citing recent economic data that supports this view.
Speaking in South Korea, Waller downplayed concerns that inflation driven by the Trump-era tariffs on imported goods would be long-lasting. He noted that, despite some recent surveys showing expectations of short-term inflation above 6%, consumer behavior doesn’t reflect significant concern about rising prices.
Waller added that if tariffs end up on the lower end of expectations and core inflation continues moving toward the Fed’s 2% target—while the labor market remains strong—he would support what he called “good news” rate cuts later this year.
“Fortunately, the solid job market and progress on inflation through April give me more time to assess how trade developments unfold and how the economy responds,” he said.
His comments closely align with his recent public statements and come amid ongoing uncertainty surrounding the direction of U.S. trade policy.
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