Federal Reserve Bank of Chicago President Austan Goolsbee expressed greater concern about the recent rise in underlying inflation than July’s weaker-than-expected jobs report, suggesting a high threshold for supporting an interest rate cut at the Fed’s September meeting.
Speaking at the Greater Springfield Chamber of Commerce in Illinois on August 13, Goolsbee—often seen as one of the Fed’s more “dovish” policymakers—highlighted that persistent inflation in the services sector was particularly troubling. While overall inflation held steady at 2.7% in July, the core rate, which excludes food and energy, climbed from 2.9% to 3.1%, driven by notable increases in airfares and dental services.
“If we start getting more reports like the latest one on overall inflation… that would be more concerning,” Goolsbee said, warning that these service price hikes could signal a lasting upward trend rather than a temporary spike.
He also voiced concern about the potential inflationary impact of President Donald Trump’s proposed 100% tariff on semiconductors, which could affect a broad range of technology products and create sustained price pressures.
On the labor market, Goolsbee downplayed the significance of July’s addition of just 73,000 jobs and downward revisions of 258,000 jobs over the previous two months. He attributed part of the slowdown to the administration’s immigration crackdown, which may have constrained population and workforce growth. Despite the disappointing numbers, he noted that job openings, hiring rates, and the 4.2% unemployment rate remain consistent with pre-pandemic norms.
“I think it’s a bad idea to overinterpret from one variable,” Goolsbee remarked, calling the labor market “pretty strong” overall.
While he did not rule out a September rate cut, Goolsbee emphasized that the decision would hinge on upcoming data, particularly the August inflation and jobs reports. “It depends on what the numbers show,” he said, stressing that every Fed meeting should be considered “live” for potential policy action.
This cautious stance contrasts with market expectations—Fed futures currently suggest near certainty of a September cut—and reflects the Fed’s balancing act between containing inflation and responding to signs of economic slowdown.
