Goolsbee sees ‘note of unease’ as Fed looks to next interest rate move

Federal Reserve President Austan Goolsbee expressed some reservations about lowering interest rates in light of mixed inflation data and ongoing uncertainty surrounding tariffs. Goolsbee, who has previously advocated for a “golden path” of moderate inflation and a stable labor market leading to rate cuts, stated that he would like to see more convincing data before the Federal Open Market Committee convenes on Sept. 16-17.

In an interview with CNBC, Goolsbee highlighted concerns about recent reports on consumer and producer prices, noting that services prices, which are not expected to be transitory, have been increasing. The July consumer price index was in line with market expectations, but the core reading, excluding food and energy, rose to 3.1%, slightly above forecasts. Meanwhile, the July producer price index recorded a significant 0.9% monthly gain, the largest in three years.

The data is being closely scrutinized for signs of the impact of tariffs on inflation. While the reports did not show immediate effects of the tariffs imposed by President Trump, economists believe that the duties are gradually influencing inflation and will become more apparent in the future.

Goolsbee emphasized the importance of economic data in determining the appropriate course of action, stating that if inflation reports continue to trend positively, lowering rates would be justified to support a strong economy with decreasing inflation. Market expectations indicate a high likelihood of a quarter percentage point rate cut in September, with some uncertainty about further reductions in October and December.

Overall, Goolsbee’s cautious approach to rate cuts reflects the complexity of current economic conditions and the need for clarity from data to guide policy decisions. Investors and analysts will be closely monitoring upcoming inflation reports and FOMC meetings for further insights into the future direction of interest rates.