Rate cuts possible if inflation improves, says Goolsbee

Chicago Federal Reserve President Austan Goolsbee has expressed that interest rate cuts may be possible in the future, depending on inflation trends. He spoke to CNBC after the Fed voted to keep short-term interest rates steady. Goolsbee commented on rising concerns from businesses regarding the effects of tariffs, which could lead to higher prices and slower economic growth. In his interview, Goolsbee noted a notable increase in anxiety among business leaders. Many are delaying investments while they assess the impact of tariffs and other government policies. He emphasized that uncertainty is a significant factor in these discussions. Despite the current uncertainty, Goolsbee remains optimistic about the potential for lower interest rates in 12 to 18 months if inflation continues to improve. He believes that lower rates are likely if inflation stabilizes. New York Fed President John Williams also highlighted the high level of uncertainty in economic trends, especially inflation. He mentioned that recent data has sent mixed signals and that uncertainty around the economic outlook has increased sharply. The Fed's recent meeting confirmed that the short-term interest rate will remain between 4.25%-4.5%. The meeting participants did keep their predictions for two rate cuts through 2025, although market expectations suggest that the Fed might take a more aggressive approach, anticipating three cuts instead.