In a wide-ranging interview with Yahoo Finance Federal Reserve Reporter Jennifer Schonberger, Chicago Fed President Austan Goolsbee discusses how tariffs impact his outlook for inflation and what he wants to see from the US economy in order to cut rates.

Federal Reserve governor Adriana Kugler said the Fed should hold interest rates steady for a while to come, because new trade barriers are likely to spark more inflation in the months ahead. Speaking at a housing conference in Washington,

"As a big business owner looking at rates at 1% or 2%, I'm definitely saying, 'what do you know that I don't?'"

A new report shows inflation has picked up and analysts believe the prices of many goods increased, in part, because of President Trump’s tariffs. It will play into decisions by the Federal Reserve about when and whether to cut interest rates and comes as the president and his team have ramped up their pressure campaign on Fed Chair Jerome Powell.

Higher tariffs put in place by the Trump White House this year have started to increase inflation, and these effects are likely to increase in the coming months, New York Fed President John Williams said Wednesday.

J.P. Morgan warned in a note that Trump's pressure on the Federal Reserve and threats to fire Chair Powell could undercut central bank independence and increase inflation risks.

What is clear is that the current 4.33% median Fed funds target rate remains well above the inflation trend. Even after the acceleration in consumer prices in June, the policy rate is roughly 1.4 percentage points above headline CPI’s one-year change – close to the biggest gap post-pandemic.

The Indian rupee fell on Wednesday as the latest U.S. inflation report showed that tariffs were beginning to feed into prices, weakening bets on rate cuts by the Federal Reserve, which lifted U.S. Treasury yields and the dollar.