MNI BRIEF: Fed's Goolsbee Sees Rates Down 'Fair Amount' In '25
MNI (WASHINGTON) - Federal Reserve Bank of Chicago President Austan Goolsbee reiterated interest rates over the next year need to come down "a fair amount" from where they are now, citing a labor market near full employment and inflation on a path to 2%.
"Over the next year, it feels like rates come down a fair amount from where they are now," he said at a Crain's Chicago event, stressing the importance of lags in the impact of policy. "If your approach is I'm just going to wait until I see that it's already been accomplished – that the trailing 12 months of inflation is already 2% – almost certainly it will be too late and and the negative impact will still be to come." (See: MNI INTERVIEW: Fed To Temper Pace Of Cuts In 2025 - Bullard)
U.S. President-elect Donald Trump's proposal to impose tariffs on goods imports could be an inflationary shock if other countries retaliate and spill over into other macro conditions, and the Fed will take all that into account in setting monetary policy, Goolsbee said. "If they're going to pass tariffs, prices are going to go up for the whatever goods you put the tariffs on," he said. "Our job is to take the conditions, if they're going to affect prices and or employment, then we'll run those scenarios. But we're not in the speculation part of the business of what do we think will pass, or what will they propose."