Fed's Goolsbee Advocates Caution Amid Growing Economic

Austan Goolsbee, President of the Federal Reserve Bank of Chicago, has urged the central bank to proceed cautiously in reducing borrowing costs. The rising uncertainty, partly due to President Trump’s administration’s actions, warrants a more measured approach to prevent the resurgence of inflation risks.

Concerns About Future Economic Trajectory

Goolsbee’s caution was echoed by two fellow Fed colleagues earlier in the day. They raised concerns about the unpredictability of the economy’s future course, urging careful deliberation before taking further monetary actions.

Tariffs on Key Trading Partners Raise Alarm

President Trump’s announcement of tariffs on Mexico, Canada, and China has created additional uncertainty for the U.S. economy. While the tariffs on Mexico and Canada were postponed for at least a month, the uncertainty surrounding them remains a key concern for the Fed.

Challenges in Assessing Tariff Impact

Austan Goolsbee emphasized the difficulty of assessing the effects of these tariffs, especially in distinguishing between long-term economic overheating and the temporary impacts of escalating trade tensions. He stressed the importance of slowing the pace towards stabilization.

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Conversations with Business Leaders Fuel Concerns

In discussions with business leaders in his district, Goolsbee noted that many expressed concerns about the economic outlook. These conversations have influenced his cautious stance, as business leaders navigate the increasing unpredictability of the market.

Fed’s Recent Rate Decisions Reflect Caution

Despite a history of advocating for rate cuts, Goolsbee’s recent comments align with the Fed’s decision to hold rates steady after three cuts in late 2024. The central bank has prioritized evaluating the long-term effects of previous policy changes before committing to further action.

Call for Data-Driven Decision Making

Fed policymakers, including Raphael Bostic and Susan Collins, highlight the need to wait for more data before adjusting rates. They emphasize that monetary policy pace should align with available economic data. Their focus remains on gradual normalization of interest rates. Patience and data-driven decisions are key to future rate adjustments.