Chicago Federal Reserve President Austan Goolsbee expressed concern over the latest U.S. inflation data, saying rising price pressures in the services sector were particularly troubling and suggested inflation was moving in the wrong direction.
Speaking at an event hosted by the Greater Rockford Chamber of Commerce in Illinois, Goolsbee said the April inflation report was more disappointing than expected, especially because the increase was not limited to energy or tariff-related categories. He pointed to persistent inflation in services as a key concern for policymakers.
Data released by the U.S. Bureau of Labor Statistics showed consumer inflation rose 3.8% in April from a year earlier, marking the sharpest annual increase in three years. The figures have reinforced concerns within the Federal Reserve about the pace of disinflation in the U.S. economy.
Goolsbee noted that the labour market remains broadly stable, while inflationary pressures are strengthening. According to Reuters, he said the current situation does not present a difficult balancing act between employment and inflation because the job market is not deteriorating, whereas inflation is clearly worsening in the near term.
The comments come after the Federal Reserve decided in April to keep short-term interest rates unchanged in the 3.5%-3.75% range. Goolsbee dissented from the policy statement issued after the meeting, objecting to language he believed signalled an unwarranted inclination towards future rate cuts.
Goolsbee also praised outgoing Federal Reserve Chair Jerome Powell for steering the U.S. economy through the COVID-19 pandemic, regional banking turmoil and a sharp inflation cycle without triggering a recession. He highlighted the decline in inflation during 2023 as a rare achievement accomplished amid growing political pressure on the central bank.
Political scrutiny of the Federal Reserve has intensified in recent years. President Donald Trump had previously attempted to remove a sitting Fed governor, while also backing a criminal probe involving Powell that was later dismissed by a federal judge.
Meanwhile, Kevin Warsh, Trump’s nominee to succeed Powell, cleared a key procedural hurdle in the Senate on Tuesday after being confirmed to the Federal Reserve Board of Governors. Reuters reported that his confirmation as the next Fed chair could take place as early as Wednesday.
