(Bloomberg) -- Federal Reserve Bank of Chicago President Austan Goolsbee said the central bank should proceed more cautiously in lowering borrowing costs amid mounting uncertainty introduced by the Trump administration.
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“Now we’ve got to be a little more careful and more prudent of how fast rates can come down because there are risks that inflation is about to start kicking back up again,” Goolsbee said Monday in an interview on American Public Media’s Marketplace program.
Goolsbee’s comments echoed that of two of his colleagues, who in separate appearances earlier Monday flagged the increased uncertainty about the future path of the economy.
President Donald Trump, just two weeks into his new administration, on Saturday announced tariffs on Mexico, Canada and China, three of the country’s biggest trading partners. The levies on Mexico and Canada were postponed for at least a month on Monday after the president struck separate deals with leaders from those countries.
Goolsbee stressed the Fed’s task of gauging the impact of tariffs will not be straightforward.
“It’s going to be hard to tell the difference between a sign of economic overheating and a sign of — this is just a temporary result of an escalating trade war, or some other geopolitical thing that’s happening,” Goolsbee said. “We’re trying to sniff out what’s the through line and we might have to slow the pace of getting to the settling point when we have that much uncertainty.”
He also pointed to conversations he’s had with executives in his district.
“I’ve got to say, the concerns that I have are in large measure coming from the business people that I’m talking to,” he said.
Goolsbee had been among those Fed officials most supportive of rate cuts over the past several months.
Policymakers held interest rates steady at their Jan. 28-29 meeting after cutting rates three consecutive times in late 2024. They’ve said they want to move at a slower pace this year, allowing them time to see how the cuts and new policies influence the economy.
“I want to see what the 100 basis points of reduction that we did at the end of last year translates to in terms of the economy,” Bostic said Monday during an event organized by the Rotary Club of Atlanta. “Depending on what the data are, it might mean that we are waiting for a while.”