Critical Statements from FED Member Goolsbee: "We could have lowered Interest, but..."

Chicago FED Chairman Austan Goolsbee stated in a statement today that the Central Bank of the United States could lower interest rates if large-scale customs tariffs are avoided.

According to Goolsbee, circumventing these tariffs through trade agreements or other means could pave the way for easing monetary policy, given the strong economic fundamentals and the positive trend in inflation.

Speaking at the 2025 Mackinac Policy Conference, Goolsbee likened the economic impact of tariffs to "a layer of fat over healthy abs," stating, "If we can lift this layer off, there’s a six-pack underneath."

Goolsbee's statements came after the decision of the U.S. Trade Court to cancel many of the tariffs implemented during the Trump administration. It was noted that these tariffs carry the risk of increasing inflation and slowing economic growth. In particular, the measures that came into effect on April 2, known to the public as "Freedom Day Tariffs," are among the developments being closely monitored by the FED.

Goolsbee stated that prior to this date, the labor market was stable and inflation was progressing towards the FED's 2% target. Under these conditions, he indicated that the policy interest rate, currently in the range of 4.25%–4.5%, could be lowered to around the equilibrium level of 3% in the long term.

However, according to Goolsbee, the current uncertainty regarding customs duties is causing companies to postpone their investments. Goolsbee stated that "Companies are putting their items down until clarity is provided in trade policy," and he expressed that the FED is also in a similar waiting stance. Policymakers are concerned that customs duties may disrupt the decline in inflation and increase unemployment.

Goolsbee also warned that if the court's decision creates a long-term environment of uncertainty, it could have more negative effects. He also added that the U.S. government could reimpose tariffs on imported goods for various reasons.

*It is not investment advice.

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