Chicago Fed President Austan Goolsbee has called inflation the biggest problem facing the U.S. economy, even as regional Fed presidents remain split on whether to raise interest rates. The debate follows a July decision to hold rates steady and comes a day before a closely watched CPI report.
Goolsbee told Wired in an interview recorded June 22 and released Aug. 11 that rising prices, not job losses, pose the bigger threat to the economy. He pointed to the unemployment rate, hiring and layoffs as his key labor-market indicators.
According to Wired, Goolsbee described the labor market as stable but weak: "We got an inflation problem and people hate inflation." He gave no signal on how he would view the Federal Open Market Committee's Sept. 15–16 meeting, and he does not vote on policy this year.
Fed policymakers split over the next move
The Fed held rates at 3.50%–3.75% by a 9–3 vote at its July 28–29 meeting. Beth Hammack, Neel Kashkari and Lorie Logan dissented, preferring a 25-basis-point increase.
Kashkari has since argued the Fed should start raising rates as the U.S.-Iran conflict complicates the outlook. The closure of the Strait of Hormuz has restricted a route that normally carries about one-fifth of global oil and gas supplies. St. Louis Fed President Alberto Musalem has also backed tighter policy, while San Francisco Fed President Mary Daly supported the July hold, saying the Fed needed more evidence on whether the energy-driven price increase would prove temporary.
Goolsbee's remarks place him closer to the inflation-focused camp without confirming his stance on the next rate hike decision.
Weak payrolls have cut September hike odds
The economy lost 23,000 nonfarm payroll jobs in July, while the unemployment rate stayed near 4.1%. May and June figures were revised down by a combined 103,000 jobs, even as average hourly earnings rose 3.2% from a year earlier.
Prediction-market traders raised the odds of no September rate change to 66%, up from about 50% a day earlier. Bitcoin initially gained almost 2% toward $65,200 on the payroll report before selling returned this week.
Bitcoin dropped about 2% to $63,780 on Aug. 11 as crude oil rose and Hormuz negotiations lost momentum. U.S. spot Bitcoin ETFs recorded $144.6 million in net withdrawals on Aug. 10, ending five straight sessions of inflows.
July CPI is the next test
The Bureau of Labor Statistics will release July CPI at 8:30 a.m. ET on Aug. 12. Economists surveyed by Reuters expect headline inflation to slow to 3.4% and core inflation to ease to 2.5%, both down a notch from June.
Source: crypto.news
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