Chicago Federal Reserve President Austan Goolsbee said Friday he remains undecided on whether the Fed will cut rates at its September meeting, highlighting the tension between weakening labor market data and persistent inflation pressures.
Speaking after a run of disappointing US jobs figures, Goolsbee noted that while softer hiring typically argues for policy easing, recent signs of sticky services inflation suggest the Fed cannot act prematurely.
key takeaways from Goolsbee’s remarks
- Acknowledged sinking employment data but stressed inflation remains a concern.
- Said hiring figures may be artificially lower due to immigration flows.
- Warned that layoffs would mark a more troubling shift in the labor market.
- Reiterated that the Fed must also weigh its inflation mandate carefully.
- Said the recent uptick in services inflation needs to be monitored to ensure it is temporary.
- Emphasized the importance of Fed independence, calling it critical for anchoring inflation expectations.
- Commented that shocks are pushing the US toward a stagflationary environment, though the economy remains near full employment.
Goolsbee also pushed back against criticism of central bank independence, stressing that anyone joining the Federal Open Market Committee (FOMC) takes the role seriously.
While markets are fully pricing in a rate cut at the Fed’s September 17–18 meeting, Goolsbee’s remarks suggest consensus among policymakers may be less certain, leaving inflation and next week’s CPI report as key determinants for the decision.
