Chicago Federal Reserve President Austan Ghoolsby said Friday that the outlook is rising but he is still seeing rate cuts on the cards.
Speaking two days after he and his colleagues voted to stabilize the short-term rate again, Goolsbee told CNBC that he has heard more concerns from businesses in his area about the impact of tariffs and the possibility of price hikes and delayed growth.
“When a lot of uncertainty is gained, I think we need to wait to see some of these things resolved on a policy basis,” the central banker said in an interview with Squawk Box. “I’ve been talking to businessmen and civic leaders across the region. Over the past six weeks, these conversations have been decided until I understand anxiety, suspension, capital projects, cables, and more, tariffs and other fiscal policies.”
Nevertheless, Goolsbee said it still hopes for future rate cuts, even if the Fed is taking a stand-alone approach for now, as issues arise about President Donald Trump’s tariff plans and deregulation and tax cuts.
“I believe that if we can continue to advance inflation in the long term, the fees will be lower than where we are today, 12-18 months from now,” he said.
Speaking separately on Friday morning, New York President John Williams also noted high levels of uncertainty regarding decision-making and economic trends, particularly inflation.
“Recent data – both hard and soft transmit mixed signals. In recent months, measures of policy uncertainty have increased rapidly,” Williams said in a speech in Nassau, Bahamas.
Both policymakers voted for the remainder of the federal government’s Open Market Committee to hold the short-term Fed fund ratio in the range of 4.25%-4.5%. In a statement after the Meeting, FOMC noted that “uncertainty about the economic outlook has increased,” and Chairman Jerome Powell used the term “uncertainty” ten times in his post-meeting press conference.
One recent question arose is whether the US economy is heading towards the stag or towards slowing and increasing growth.
“Taxes, price hikes, production cuts. This is a different impulse for stagflation than saying this is stagflation,” Goolsbee said. “It’s not the 1970s stag because the unemployment rate is just 4% and inflation is two seconds. It’s just… when the uncomfortable environment is moving direction the wrong way.”
According to data from the CME Group, participants in the FOMC meeting maintained forecasts for two rate reductions through 2025.
