Investing.com -- Austan Goolsbee, the president of the Chicago Federal Reserve, recently spoke about various economic issues during an interview with CNBC. He discussed the anxiety of businesses regarding capital expenditure (capex) due to tariffs, the need for the Federal Reserve to maintain a steady approach, and the current strength in hard economic data.
Goolsbee noted that it’s not realistic to know the rate path at the moment, suggesting a degree of uncertainty in the financial landscape. He also mentioned that one-time tariffs without retaliation are likely to be transitory. However, he cautioned that the term ’transitory’ should be used carefully.
In terms of interest rates, Goolsbee expressed his belief that rates will be lower 12-18 months from now. He added that the longer the wait, the more rate cuts will be backloaded, indicating a potential delay in the impact of such cuts.
Furthermore, Goolsbee stated that if market inflation expectations rise, the Federal Reserve would need to act accordingly. He explained that the response to stagflation would depend on the hit to inflation and jobs.
In conclusion, Goolsbee recognized that we’re going to have to see through this bumpy patch, acknowledging the current challenges in the economic landscape.
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