The Federal Reserve maintains a “wait-and-see” attitude towards the impact of tariff policies, and there is still uncertainty in the decision to cut interest rates

The Federal Reserve maintains a “wait-and-see” stance, with the impact of Trump’s policies becoming a key variable in interest rate cuts. Chicago Fed President Austan Goolsbee has explicitly stated that the Fed is currently in a “wait-and-see” state and will not take rash action until the comprehensive impact of the Trump administration’s series of new policies on the economy is clarified. These policies cover multiple dimensions such as trade tariff adjustments, immigration policy changes, tax structure optimization, government spending cuts, and federal employee layoffs. He emphasized that before making a decision to cut interest rates, the Federal Reserve must wait for the policy effects to be fully released until the situation “settles”.

On Monday, Austan Goolsbee stated in an interview with Chicago Public Television (WTTW) that the Federal Reserve is currently closely monitoring the direction of the Trump administration’s new policies and will only finalize its follow-up action plan after obtaining more detailed and accurate economic data and a clearer understanding of the macroeconomic situation.

Austan Goolsbee pointed out, “The current economic environment is filled with a lot of uncertainty factors, and the market is in a highly volatile state. Before the Federal Reserve further advances interest rate cuts, we must wait for these uncertainties to gradually dissipate

He further elaborated that recent policy adjustments by the US government in areas such as tariffs, immigration, taxation, fiscal spending cuts, and federal employee layoffs are highly likely to have complex impacts on economic growth, the balance of supply and demand in the job market, and inflation levels. Therefore, the Federal Reserve adheres to the principle of prudence and will not make decisions easily.

Market bets on July interest rate cut, with divergent opinions within the Federal Reserve

Although the current market generally expects the Federal Reserve to initiate a rate cut cycle in July, Austan Goolsbee’s statement indicates that there is still no consensus within the Fed on the timing and necessity of a rate cut.

From a market perspective, if Trump’s policies weaken economic growth momentum and economic data continues to weaken, the Federal Reserve may be pressured to accelerate interest rate cuts to stimulate economic recovery; However, if inflationary pressures remain high and exceed the Federal Reserve’s target range, the Fed may delay the implementation of loose monetary policy to stabilize price levels.

Gold trend differentiation, risk aversion dominates the market

Against the macro backdrop of the Federal Reserve maintaining a cautious attitude and the increasing policy uncertainty of the Trump administration, the gold market is showing a trend of differentiation.

Due to the increasing concerns about global economic uncertainty and the growing expectation of interest rate cuts by the Federal Reserve, gold, as a high-quality asset for hedging and preservation, has been warmly sought after by investors, and its price has approached historical highs. In addition, if the Federal Reserve ultimately implements a rate cut, real interest rates will decline and the opportunity cost of holding gold will decrease, which will further enhance the attractiveness of gold in investment portfolios.

Conclusion

Austan Goolsbee’s remarks indicate that the Federal Reserve maintains a highly cautious attitude towards the current complex and volatile economic environment and will not blindly take interest rate cuts due to market expectations. Trump’s policy combination is like a double-edged sword, containing both the risk of pushing up inflation and the possibility of suppressing economic growth, which undoubtedly adds many difficulties to the Federal Reserve’s monetary policy decisions.

In the short term, the Federal Reserve will closely monitor changes in key economic data such as inflation rate, unemployment rate, and consumer spending in the coming months, as an important basis for judging the economic situation, and then decide whether to initiate interest rate cuts in July to achieve policy goals of economic growth, price stability, and full employment.

As of 3:00 PM Beijing time, the spot gold price is 2935.63/ounce.