During a speech at Jackson Hole on Aug. 8, 2023, Chicago Federal Reserve President Austan Goolsbee cautioned against misrepresenting the inflationary impacts of corporate price hikes and tariffs, which have become central issues in the economic platforms of the Trump and Harris campaigns. Goolsbee, however, refrained from directly discussing the presidential race due to the Fed's commitment to remaining politically neutral.
Voters have consistently ranked the economy and the high cost of living as their top concerns during this election cycle, leading Vice President Kamala Harris and former President Donald Trump to emphasize lowering costs in their economic proposals. Harris has proposed a federal ban on corporate price-gouging in the food and grocery industries, while Trump has advocated for higher tariffs on imports, particularly from China.
Goolsbee explained that tariffs can lead to short-term increases in consumer prices by raising producer costs, but they do not necessarily result in long-term inflation. He also cautioned against drawing definitive conclusions about markups in prices based on short-term observations.
Recent data has shown a slight cooling of inflation since its peak in the summer of 2022, with the annual inflation rate in the consumer price index reaching its lowest level since March 2021. As Trump and Harris continue to address inflation concerns, investors are closely watching the Fed for signals of a potential interest rate cut in September.
The Fed is set to hold its annual meeting in Jackson Hole, Wyoming, where markets will be looking for indications of the central bank's decision on interest rates. Goolsbee, while not a voting member of the Federal Open Market Committee, emphasized that the Fed is considering all possibilities, including the potential for a recession, in their decision-making process.