Federal Reserve Bank of Chicago President Austan Goolsbee expressed concerns regarding the Supreme Court’s recent decision to invalidate several of former President Donald Trump’s global tariffs. Speaking to reporters on February 23, 2025, Goolsbee indicated that this ruling may contribute to further uncertainty for businesses, although it could also aid in alleviating inflationary pressures.
“The more unpredictability you have, the more question marks that businesses have about policy,” Goolsbee stated during a press briefing in Washington. He noted that the current climate of low hiring and low firing, which he attributes to business uncertainty, has been exacerbated by this latest legal development. Despite these concerns, he acknowledged that the tariff ruling might provide some relief regarding inflation.
The Supreme Court’s ruling has prompted the current administration to explore new legal pathways to reinstate the tariffs, which were initially based on a 1977 emergency law that the Court deemed inappropriate for such measures. Goolsbee emphasized the need for tangible evidence of inflation easing before he would endorse additional interest rate cuts.
In prepared remarks for a speech on February 24, 2025, at a conference hosted by the National Association for Business Economics, Goolsbee stated, “I remain optimistic that there can be more rate cuts this year. But that hinges on seeing actual progress on inflation that shows we are on a path back to 2%.”
He clarified that the assessment of inflation progress would not depend merely on the duration of price declines but on whether multiple economic indicators align with the Federal Reserve’s target. As it stands, interest rates may not effectively reduce demand if inflation hovers close to 3%.
The Federal Reserve has already reduced interest rates three times in the latter part of 2025, following a significant one percentage point cut in 2024. Following their January meeting, the Federal Reserve opted to keep rates steady and is expected to maintain this stance in March. Analysts predict that another quarter-point rate cut may not occur until June, with expectations of only two cuts throughout the remainder of the year.
Goolsbee mentioned that if inflationary pressures diminish, the Federal Reserve could potentially implement “multiple” rate cuts in 2026. Recent reports, including one released on February 20, 2025, indicated that underlying prices had increased by a surprising 3% over the past year, highlighting ongoing inflation challenges.
Despite these economic pressures, Goolsbee described the labor market and overall economic growth as “pretty steady.” In an interview on Bloomberg Television, he was asked about the future of Jerome Powell as chair of the Federal Reserve, whose term ends in May. Goolsbee expressed his admiration for Powell, stating, “I like him being around,” while acknowledging he was unaware of Powell’s intentions regarding his future role.
Additionally, Goolsbee mentioned Kevin Warsh, who has been nominated by Trump to succeed Powell, indicating his respect for Warsh’s potential leadership. The ongoing discussions around tariffs and interest rates underscore the complex economic landscape that businesses must navigate in the wake of these significant legal and policy shifts.
