He also believed the labor market was still on firmer footing because declines in payroll growth coincided with a fall in the number of people available for work.
Chicago Fed President Austan Goolsbee reportedly urged other policymakers to “reserve judgment” as calls for a rate cut in September rose following Tuesday’s tepid inflation data.
According to a report by The Wall Street Journal, Goolsbee said that “the most concerning thing” in Tuesday’s CPI report was the jump in the prices of some services. He also urged colleagues to wait for other reports, including a different measure of wholesale prices due for release Thursday, to show similar trends over the coming months.
Goolsbee also believed the labor market was still on firmer footing because declines in payroll growth coincided with a fall in the number of people available for work, which could reflect the Trump administration’s stringent immigration policies.
“I am cautious about over-interpreting payroll jobs, numbers that are giving different information than other labor market indicators,” he reportedly said. The crucial weekly jobs data is due later this week.
Clamour for interest rate cuts has risen after U.S. consumer price index (CPI) data showed that inflation rose 0.2% in July compared to the previous month, which was roughly in line with estimates. Gasoline prices slipped 2.2% month-on-month while food prices largely remained flat.
On Tuesday, U.S. Treasury Secretary Scott Bessent also floated a 50-basis-point rate cut, citing weakness in the labor market. He added that the Fed could have cut rates in June if it had been given accurate data, which he described as a “foundational issue” at the central bank.
According to CME Group’s FedWatch tool, 100% of traders have priced in at least a 25 basis point rate cut in the U.S. central bank’s next policy meeting in September, while some are even expecting a 50 basis point cut.
Retail sentiment on Stocktwits about SPDR S&P 500 ETF Trust (SPY) was in the ‘bullish’ territory at the time of writing, while traders were also ‘bullish’ about the Invesco QQQ Trust Series 1 (QQQ), which tracks the Nasdaq 100 index.
Separately, Goldman Sachs analysts reiterated their forecast for the U.S. Federal Reserve to unveil three 25-basis-point cuts this year with two more in 2026. According to Goldman, benchmark interest rates could drop to a range of 3% to 3.25%, compared with the current rates between 4.25% and 4.5%.
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