On Monday, Chicago Fed President Austan Goolsbee emphasized the significance of stable long-term inflation expectations, despite a recent uptick in short-term forecasts. During a CNBC interview, he pointed out that while short-run inflation expectations have risen, it’s crucial to note that market-based long-run inflation expectations have not increased.

Goolsbee highlighted the Federal Reserve’s need to consider the economic outlook throughout the year, with tariffs being one of the many factors under review. He expressed a desire to understand the impact of tariffs on the strong productivity growth observed, suggesting that the interplay between trade policies and economic performance is a key area of interest for the Fed.

The Fed’s focus on long-term inflation expectations aligns with its mandate to ensure price stability and sustainable economic growth. Goolsbee’s comments come at a time when the central bank is closely monitoring a range of economic indicators to guide its policy decisions.

Goolsbee also said he still believes rates will be lower in 12 to 18 months.

The Chicago Fed President’s remarks indicate a careful approach to policy-making, considering both immediate economic conditions and future expectations.

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