Chicago Fed’s Goolsbee Flags Tariff Risks, Keeps Rate-Cut Options Open Ahead of September Meeting

Chicago Federal Reserve President Austan Goolsbee voiced concerns Tuesday about the potential inflationary impact of tariffs and uncertainty over the U.S. labor market’s direction. Speaking ahead of the Sept. 16–17 Federal Open Market Committee (FOMC) meeting, Goolsbee left the door open to adjusting policy sooner if the jobs picture worsens.“If the job market deteriorates, a rate cut will be inevitable,” he said, stressing that any move will require “a series of positive inflation data.”Currently, the Fed has seen only two months of moderating inflation, while the latest CPI report shows a worrying uptick in services inflation — a key area of concern for policymakers.Key TakeawaysTariffs and Inflation: Goolsbee said he cannot be certain tariffs won’t push up inflation, suggesting trade policy risks could influence the Fed’s path.Labor Market Watch: While not convinced of current deterioration, he indicated a weakening labor market would trigger rate cuts.Policy Windows: All Fed meetings this fall remain potential “windows” for adjustments.September in Focus: Markets will closely watch jobs data and August CPI for clues on the Fed’s stance before the September meeting.Market ImplicationsBond Market: Continued uncertainty may keep Treasury yields volatile until clearer labor market or inflation trends emerge.Equities: A potential dovish pivot this fall could boost growth stocks, but sticky services inflation may temper optimism.Crypto: Digital assets like Bitcoin and Ethereum could benefit from any dovish Fed shift, particularly if it weakens the U.S. dollar.