Chicago Fed President Goolsbee evaluated tariffs, market expectations, and the interest rate path.

Austan Goolsbee, President of the Chicago Federal Reserve, discussed various economic issues in an interview with CNBC. He addressed businesses' concerns about capital expenditures (capex) due to tariffs, the need for the Federal Reserve to maintain a stable approach, and the current strong trends in economic data. Goolsbee noted that understanding the path of interest rates is not realistic at this time, indicating a degree of uncertainty in the financial environment. He suggested that one-off tariffs applied without retaliation are likely to be temporary, but warned that the term "temporary" should be used cautiously.

Regarding interest rates, Goolsbee expressed his belief that they will be lower in 12 to 18 months. He emphasized that as the waiting period extends, the effects of rate cuts will be felt later, potentially delaying their impact. He also highlighted that if market inflation expectations rise, the Federal Reserve must respond accordingly, and the reaction to stagflation will depend on its effects on inflation and employment. Ultimately, Goolsbee acknowledged the current challenges in the economic environment and stressed the need to navigate this volatile period.