Chicago Federal Reserve Bank President Austan Goolsbee said he expected interest rates to be "a fair bit lower" in 12-18 months but added that it may take longer than anticipated for the next cut because of economic uncertainty, according to a Financial Times interview published Wednesday.
Goolsbee, a voting member of Fed's rate-setting committee this year, told the FT that if markets start factoring higher inflation then he would view that as "a major red flag area of concern" for policymaking decisions.
"My view is that when there’s dust in the air, 'wait and see' is the correct approach when you face uncertainty,” he told the FT in an interview.
Fed Chair Jerome Powell later said that President Donald Trump's tariff increases would delay progress in bringing down inflation this year, but the Fed's base case is that tariff-related price impacts will be transitory, working through the economy quickly.
