Fed's Austan Goolsbee sees lower interest rates if tariffs fade away

New York: Federal Reserve Bank of Chicago President Austan Goolsbee said a resolution in trade policy could push the US economy back toward its pre-tariff trajectory, allowing officials to lower interest rates. "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," Goolsbee said Thursday. "If you have stable full employment and inflation going to target, rates can come down to where they would eventually settle."

"If we can get the dust out of the air, I do still think that underneath there is a strong dual-mandate economy," Goolsbee said during the moderated discussion in Mackinac Island, Michigan. "The longer we go contemplating really big changes, like some of the ones that have been discussed, the more that fades into the background."