synopsis

He also warned that the U.S. economy is heading in the “stagflationary direction.”

Chicago Federal Reserve Bank President Austan Goolsbee said on Thursday that interest rates could come down in 2025 if President Trump’s tariffs are avoided.

Speaking at the Detroit Regional Chamber Mackinac Policy Conference, Goolsbee touched upon the interest rate question, explaining the path for cuts in 2025.

He also said that if the employment and inflation targets remain in sight, interest rates could eventually come down.

“If on the back end of this thing, either we don’t put the tariffs in, or they reach some deals that allow us to avoid doing that, we could go back to what we were prior to April 2,” he said.

Goolsbee added that the longer the big changes are contemplated, the higher the possibility of a “dual-mandate economy” fading into the background.

He also warned that the U.S. economy is heading in the “stagflationary direction,” adding that employment in the country is deteriorating while inflation is rising.

Goolsbee’s comments come at a time when the Federal Open Market Committee (FOMC) kept interest rates unchanged and maintained a wait-and-watch approach.

Powell had previously said Trump’s tariffs were larger than expected.

Earlier on Wednesday, a federal trade court blocked the Trump administration’s levies, but the decision has been appealed, and a stay has been sought by the President’s team on Thursday. The court issued a stay on the ruling until all appeals are decided upon.

Meanwhile, the iShares 7-10 Year Treasury Bond ETF (IEF) gained 0.46% at the time of writing, while the Invesco QQQ Trust (QQQ), which represents the Nasdaq-100 index, was up 0.25%.

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