Goolsby Says US High Tariffs Complicate Inflation Outlook

Has Maintained a Dovish Stance
Shifts to Caution Amid Trump's High Tariff Policy
"It's Like Throwing Dust Back Into the Air"

Austin Goolsby, President of the Federal Reserve Bank of Chicago, USA, is seen holding his head with both hands while speaking at the New York Economic Club on April 10 (local time). Photo by Reuters Yonhap News

Austin Goolsby, President of the Federal Reserve Bank of Chicago, stated on July 11 (local time) that the new tariffs announced by the Donald Trump administration are complicating the inflation outlook, making it difficult to support the interest rate cuts demanded by President Trump.

In an interview with the Wall Street Journal (WSJ) on the same day, President Goolsby commented on the U.S. announcement of high tariffs on Canada and Brazil, saying, "The more factors we keep adding that make it difficult to determine whether prices will rise or not, it's like throwing dust back into the air."

This year, President Goolsby holds voting rights on monetary policy decisions at the Federal Open Market Committee (FOMC) and is considered one of the most dovish (favoring monetary easing) members within the Federal Reserve. Since the June meeting, President Goolsby, along with Fed Vice Chair Michelle Bowman and Governor Christopher Waller, has voiced support for an early rate cut. However, with the announcement of new tariffs increasing inflation uncertainty, he suggested that the Fed may need to be more cautious about lowering rates.

Previously, President Trump sent a letter announcing that, starting August 1, a 50% reciprocal tariff rate would be applied to Brazil, and also announced that the tariff rate on Canada would be raised to 35%. There are concerns that these high tariffs on Canada and Brazil could lead to higher inflation.

Regarding the new tariff announcements, President Goolsby said, "When we go back and talk to businesses, I hope they don't worry that 'these tariffs are taking us back to where we were on April 3,' but since this just happened, I don't know what will happen."

In contrast, President Trump has continued to pressure Federal Reserve Chair Jerome Powell to quickly cut the benchmark interest rate. With President Trump expected to nominate the next Fed chair next year, key candidates include Kevin Hassett, White House economic adviser and Chairman of the National Economic Council (NEC); Scott Besant, Treasury Secretary; Kevin Warsh, former Fed Governor; and Christopher Waller, current Fed Governor.

Trump's close associates have also renewed their pressure on Chair Powell, criticizing the Fed for spending excessive amounts on renovations of its headquarters building. Russell Vought, Director of the U.S. Office of Management and Budget (OMB), on July 10 (local time), publicly released a letter to Chair Powell on X (formerly Twitter), stating, "Even the Palace of Versailles (France) would cost about $3 billion at today's dollar value," arguing that the Fed's renovation costs are equivalent to the cost of building a palace.