## Goolsbee Cautious on Rate Cuts Amidst Mixed Inflation Signals
Chicago Federal Reserve President Austan Goolsbee is expressing caution about lowering interest rates, citing mixed inflation data and uncertainty surrounding tariffs. He’s looking for more convincing evidence before the Federal Open Market Committee (FOMC) meeting in September.
- Mixed Inflation Data: Goolsbee is hesitant due to recent inflation reports. The July consumer price index (CPI) was in line with expectations, but the core reading (excluding food and energy) rose slightly. The July producer price index (PPI) showed a surprisingly high monthly gain.
- Services Prices: Goolsbee is particularly concerned about rising services prices, which he believes “are not obviously going to be transitory.”
- Tariff Uncertainty: The impact of tariffs on inflation is being closely examined. While not immediately apparent in the data, economists believe import duties may be slowly influencing inflation.
- “Golden Path” Revisited: Goolsbee previously spoke of a “golden path” of moderating inflation and a stable labor market leading to lower rates. He now wants more data to confirm this path.
- Market Expectations: Markets largely expect a rate cut in September, but there’s less certainty about further cuts in October and December.
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