Fed’s Goolsbee Says Tariff Ruling Could Help Cool Inflation

Federal Reserve Bank of Chicago President Austan Goolsbee said the Supreme Court’s decision to strike down many of President Donald Trump’s sweeping global tariffs may cause more uncertainty for businesses but could also help cool inflation.

“The more unpredictability you have, the more question marks that the businesses have about policy,” Goolsbee told reporters late Monday in Washington. “The dynamic of low hiring, low firing — which I believe came from business uncertainty — is made even more solidified by adding more uncertainty. That said, it could bring relief to the inflation side.”

The administration is seeking new legal avenues to reimpose the duties after the court ruled Trump can’t base the tariffs on a 1977 emergency law.

Read More: Trump Eyes New Trade Probes to Revive Tariffs After Court Defeat

Goolsbee, in prepared remarks for a speech Tuesday at a National Association for Business Economics conference, said he wants to see evidence that inflation is cooling to the Fed’s 2% target before supporting further interest-rate cuts.

“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%,” Goolsbee said.

The Chicago Fed chief told reporters inflation progress won’t be determined by the number of months over which prices cool, but only when multiple components are moving in the direction of the Fed’s target. He added that interest rates likely aren’t slowing demand if inflation remains near 3%.. Bloomberg's Michael McKee spoke with him about this, as well as whether or not Jerome Powell should remain at the central bank when his term as chair ends. Fed officials cut rates three times in the last few months of 2025 after lowering them by a full percentage point in 2024. They left rates unchanged at their January meeting and are expected to do so again in March.

Economists and market participants don’t see another quarter-point rate cut at least until June, and expect the Fed to cut just twice this year. Goolsbee said that the Fed could cut “multiple” times in 2026 if price pressures abate.

A report released Friday showed underlying prices rose by a higher-than-expected 3% in the year through December.

Goolsbee said the labor market and economic growth are “pretty steady” right now, speaking Tuesday in an interview on Bloomberg Television. When asked whether he thought Jerome Powell should remain at the central bank as a governor when his term as chair ends in May, Goolsbee said that while he wasn’t aware of Powell’s plans, he thinks of him highly.

“I like him being around,” Goolsbee said.

He also praised Kevin Warsh, whom Trump has said he plans to appoint as the next chair.

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