President Trump is considering lawsuits against the Fed’s $2.5 billion renovation project
President Donald Trump may sue the Federal Reserve with a $2.5 billion headquarters renovation project.
Federal Reserve officials said on August 13 that they were worried about the rising underlying inflation last month, as many economists would expect, suggesting that they may not be inclined to support interest rate cuts in September.
“It’s going to be even more concerning when you start receiving reports like the latest report on overall inflation,” Austan Goolsbee, president of the Federal Reserve Bank of Chicago and a voting member of the Fed’s interest rate setting committee, said in a forum by the Greater Springfield Chamber of Commerce in Illinois.
Goolsbee’s remarks are worth noting as they are considered one of the more “silly” members of the Fed’s pricing committee. This means he can either move away from the recession and raise rates and raise rates or lower the rates to keep longer to reduce inflation.
His views appear to contradict many economists and investors who saw the July employment report as disastrous and relatively mild inflation readings. Earlier on Wednesday, the FED futures market saw a nearly 100% chance of interest rate cuts in September.
Like many Fed officials, Goolsbee has supported refraining from cutting interest rates until the Fed can assess the impact of President Donald Trump’s tariffs on consumer prices.
At a press conference following the Chamber event, Goolsbee said, “The most concerning thing about the (inflation) report was the service.”
The prices of underlying services rose sharply as categories such as airfares and dental services rose. Goolsbee said she is worried about reading because it reflects a potentially persistent trend, rather than a one-off clash from tariffs.
He also said he is worried about Trump’s plan to impose 100% tariffs on semiconductors.
Overall inflation was stable at 2.7% in July, but the core major, which removes volatile food and energy items, rose from 2.9% to 3.1%, reflecting an increase in service prices, according to the consumer price index released on August 12th.
At the same time, Goolsbee said it was not worried about the unfortunate 73,000 jobs added by US employers in July, as well as the downward revision of 258,000 jobs over the past two months. This number has left an average anemia growth of 35,000 over the past three months.
But Goolsbee said Trump’s immigration crackdown likely affected population growth and employment numbers, but that doesn’t mean the labour market has weakened significantly. He noted that job initiation and employment rates are comparable to preschool levels. The unemployment rate of 4.2% has remained historically low.
“I think it’s a bad idea to (overinterpret) one variable,” Goolsbee told reporters. “I don’t know what the immigration flow is.”
Ghoolsby also said at the Chamber of Commerce event that “the labor market is in a pretty strong and quite solid state.”
He said he has not ruled out interest rate cuts in September, and that Fed officials will consider the August inflation and employment report before making a decision at a mid-September meeting.
“It depends on what the numbers show,” he said, adding that he has not made a decision. “We’re thinking about all the meetings the Fed has to be a live meeting.”
(This story has been updated with new information.))
