Austan Goolsbee, President of the Federal Reserve Bank of Chicago and not a voting member of the Federal Open Market Committee (FOMC) in 2026 — Chicago's rotating seat belongs to Cleveland's Beth Hammack this year — told Fox News Channel's Special Report with Bret Baier on Friday that he supported the Fed's decision to hold rates steady in July and sees a route back to the central bank's 2% inflation target. "If we can get some of this stuff into the rearview mirror, then I think we get back on what I was calling the golden path, which is inflation heading back to 2%," he said, pointing to fading tariff effects and easing oil prices tied to the war in Iran.
Inflation had "stalled out" and moved the wrong way for a stretch, Goolsbee acknowledged, but the past couple of months have brought better readings — PCE inflation cooled to 3.7% in June from a 4.1% peak in May, and mild CPI and PPI reports this week, on top of a soft jobs report last Friday, have largely wiped out trader bets on a September hike.
Turning to growth, Goolsbee called GDP and the labor market basically stable, though productivity worried him more: the last two readings were weak, and he warned that a persistent decline would force a rethink of the AI narrative driving markets. On spending, he waved off one weak month of retail sales as just that, but cautioned that continued weakness would be a real concern.
Monetary Policy
I supported the decision to hold rates in July.
Inflation
If we can get some of this stuff into the rearview mirror, then I think we get back on what I was calling the golden path, which is inflation heading back to 2%.
The overall level being in the 3%, that's too high; that's not great. The good news is the new information that's been coming in has been a little better.
Inflation has been too high, and our progress stalled out a little bit and was going the wrong way.
But now, for a couple of months, we've been getting a little bit better readings and hopefully that will continue. But we're in that delicate space where the overall economy feels fairly stable, and we're mostly watching the inflation component.
Encouraged by CPI reports and needs more data.
Growth & Economy
US GDP and labor market are basically stable.
Energy & External Risks
Hopeful that fading tariff effects and easing oil prices tied to the Iran war will help inflation continue to improve.
AI & Productivity
Persistent drop in productivity would change the AI narrative.
Past 2 readings on productivity were very poor.
On the Ground / Real Economy Feedback
Continued spending weakness would be worrying.
Weak retail sales represent just one month of data.