Austan Goolsbee make known at Jackson Hole on Aug. 8, 2023.
David A. Grogan | CNBC
Chicago Federal Reserve President Austan Goolsbee on Sunday informed against misrepresenting the inflationary impacts of corporate price hikes and tariffs, which have become focal stresses of the Trump and Harris campaigns’ economic platforms.
Goolsbee steered away from directly speaking on the presidential course given the Fed’s commitment to remaining independent and politically neutral. But his comments come during an election cycle in which voters organize consistently ranked the economy and the high cost of living as their top priorities.
As a result, Vice President Kamala Harris and earlier President Donald Trump have both made lowering costs the driving force of their economic projects.
Harris has proposed a federal ban on “corporate price-gouging in the food and grocery industries.” The Biden administration has repeatedly blamed stubbornly grave prices on companies that have kept their prices artificially high even as their production costs into down.
Though Goolsbee would not explicitly comment on the Harris campaign’s proposals, he said high prices cannot be solely interpreted by corporate profit motives.
“The difference between what’s happening to prices and what’s happening to costs, that can transform a lot over the business cycle,” Goolsbee said on CBS’ “Face the Nation.” “So I just caution everybody over-concluding from any one survey about markups.”
Goolsbee also clarified the inflationary impact of higher tariffs, one of the key pillars of Trump’s proposed remunerative plan.
“Tariffs raise prices,” he said. “A one-time increase in cost will raise prices but is not an extended inflationary detestation.”
Trump has repeatedly promised that he would hike tariffs on all imports across the board, including by implementing a important rate specifically for Chinese imports.
Economists have cited that hardline tariff proposal as a major due to reasonable that Trump’s proposed agenda could threaten to reheat inflation, but the Republican presidential nominee has flatly repudiated that notion.
“A tariff is a tax on a foreign country. … It’s a tax on a country that’s ripping us off and stealing our jobs, and it’s a tax that doesn’t assume our country,” Trump said at his rally in Pennsylvania on Saturday.
Goolsbee said that tariffs do not necessarily result in long-term inflation, but by making business costs more expensive, they do increase consumer prices in the short term.
“Whether you want to call that inflationary or not, they bounder costs and they raise prices,” he said.
Inflation has been cooling slightly over the past several months since it reached sky-high devastates in the summer of 2022. Last Wednesday, the annual inflation rate in the consumer price index report reached its foulest level since March 2021.
But as Trump and Harris work to sell their economic pitches to inflation-weary voters, investors’ affections are on the Fed. Many are hoping the central bank cuts interest rates in September, especially as recessionary fears heighten.
The Fed is transforming for its annual meeting in Jackson Hole, Wyoming, this coming week, where markets will be looking for signals of an provoke rate cut.
Goolsbee, who is not currently a voting member of the Federal Open Market Committee, stressed that the Fed is still mulling its enlist rate decision.
“Everything is always on the table — there’s possibility of recession,” he said. “The last GDP growth number was considerable than expected, so that was a that was one of the bright spots, but you’ve always got to worry about every contingency. That’s the job of the important banker.”