Goolsbee Says Inflation Is Bigger Economic Risk Than Labor-Market Weakness

Federal Reserve Bank of Chicago President Austan Goolsbee said he is more concerned about inflation running too high than about weakness in the U.S. labor market, although it is unclear whether that concern translated into support for the interest-rate hike favored by some of his colleagues last month, Ann Saphir reported for Reuters.

Federal Reserve Bank of Chicago President Austan Goolsbee says inflation remains the biggest economic problem facing the U.S. economy.

"The biggest problem facing our economy right now is not the collapse of industry and the collapse of jobs; it's that the prices have been rising too fast. We got an inflation problem and people hate inflation," Goolsbee said in a video published by WIRED and recorded June 22.

Looking at indicators including the unemployment, hiring and layoff rates, Goolsbee said the labor market was "stable, without being good," which he described as his characterization of current conditions.

The Federal Reserve left its policy rate unchanged on July 29 at 3.50% to 3.75%, with three of its 12 voting policymakers dissenting in favor of a rate increase. Goolsbee is not a voting member of the Federal Open Market Committee this year.

Goolsbee has not publicly said whether he supported the decision to keep rates unchanged. Inflation has remained above the Fed's 2% target, although policymakers have continued to expect inflation to ease over time.