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The Federal Reserve might have to sit tight for longer before changing interest rates, a top Fed official said.
During a CNBC interview on Friday, Chicago Federal Reserve President Austan Goolsbee said that President Donald Trump’s latest tariff saber-rattling has muddled the Fed’s leeway to slash interest rates.
“Everything’s always on the table. But I feel like the bar for me is a little higher for action in any direction while we’re waiting to get some clarity,” Goolsbee said. He added he’d make up his mind once the tariffs’ effect on prices is better understood.
Goolsbee casts a vote in the Federal Open Market Committee, which sets interest rates that determine the cost of borrowing. The next FOMC meeting is being held in mid-June, and the Federal Reserve is expected to cut interest rates twice this year.
Trump shook financial markets again on Friday with a renewed threat to impose a 50% tariff on goods imported from the E.U. on June 1. “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with,” he wrote in a social media post.
He also warned about slapping a 25% import tax on Apple’s (AAPL-0.39%) iPhones if they’re not produced in the United States. The president has pressured Apple CEO Tim Cook to uproot the company’s supply chains and transfer its factories to the United States. Apple has recently shifted some production to India to avoid the steep tariffs on Chinese products.
Earlier this week, another top Fed official said he believed the Fed would cut rates only once this year given the uncertain effect of the trade war on consumer prices.
“I’m leaning much more into one cut this year because I think it will take time, and then we’ll sort of have to see,” Federal Reserve Bank of Atlanta President Raphael Bostic said Monday on CNBC.