Fed Rate Cuts Could Happen If Trump Tariffs Are Avoided: Goolsbee

The recently released FOMC minutes showed that Jerome Powell and the US Federal Reserve are likely to maintain a cautious approach as long as Donald Trump’s tariffs remain in place. Chicago’s Austan Goolsbee has weighed in on this and suggested that the market could witness Fed rate cuts if these tariffs somehow go away.

Fed Rate Cuts On The Table If Trump Tariffs End

According to a Reuters report, the Chicago Federal Reserve Bank President stated that he believes the market would witness some Fed rate cuts if the big tariffs could end through trade deals or otherwise. Goolsbee made this statement given the current strength of the US economy and the fact that inflation is trending downward.

This comes just following the release of the May FOMC meeting minutes, which showed that Jerome Powell and the committee are currently taking a cautious approach due to the Trump tariffs. The Fed believes that these tariffs could lead to higher inflation. As such, the US central bank is choosing to wait and see what happens rather than lowering the benchmark interest rates.

The Reuters report noted that Goolsbee did not comment directly on the US Trade Court’s ruling against the Trump tariffs, a development that could lead to a permanent halt of these tariffs. The court ruled that the US president acted beyond his authority under the International Emergency Economic Powers Act (IEEPA).

However, as CoinGape reported, White House adviser Kevin Hassett said that he is confident that the appeals court will overturn the ruling. The US administration is also considering taking the case to the Supreme Court if they don’t get an interim relief from the appeal court.

Meanwhile, in a Bloomberg interview, Robert Kaplan, the former president of the Dallas Federal Reserve Bank, stated that the market might not see any Fed rate cuts this year. He said that he expects sluggish growth but not a recession this year.