Chicago Fed president Austan Goolsbee said inflation data has been improving as tariff and oil effects fade, while Richmond Fed president Tom Barkin said it remains an open question whether another rate increase is needed. Former Dallas Fed president and Goldman Sachs vice chairman Robert Kaplan, meanwhile, backed the Fed's July pause and said incoming data should decide the next move.
The debate over the Fed's next move looks less like a simple hold-versus-hike split and more like a spectrum. Goolsbee leans toward patience, Barkin declines to commit either way, and Kaplan, no longer a policymaker but a close observer, says the July decision to pause was the right one.
Goolsbee sees inflation data improving
Goolsbee said in a Fox News interview that recent inflation readings have been a little better and that he hopes the trend continues. He attributed much of the current inflation to tariffs and higher oil prices tied to the Iran war, pressures he had originally hoped would prove one-time increases.
The Chicago Fed president described headline inflation in the 3% range as too high but called incoming data encouraging and the broader economy steady. He does not hold an FOMC vote this year.
Barkin won't commit to a September call
Barkin, also a non-voter this year, told a Greenville, South Carolina audience that it remains an open question whether the Fed needs to raise its interest rate again to hit its 2% target. He put headline PCE inflation at 3.7%, well above target, and pointed to real private nonresidential fixed investment growing at an annualised 9.5% in the first half of 2026, driven largely by AI infrastructure spending.
He also noted July payrolls fell by 23,000 even as unemployment held at 4.1%, a 58th straight month at or below 4.5%. Barkin said he never prejudges the path forward and will keep gathering signals before the meeting.
Kaplan defends the pause, flags Treasury yields
Kaplan backed the Fed's 9-3 vote to hold rates at 3.50%-3.75% in July, telling Bloomberg Television that policymakers needed more time to assess inflation before acting. According to crypto.news: "If I see meaningful improvement, I might be willing to stay put".
He cited AI investment, tariffs, labor shortages and oil prices as forces that could keep inflation elevated, while noting core CPI eased to 2.5% annually in July from 2.6% in June.
Kaplan also said he is more concerned about long-term Treasury yields than the federal funds rate, pointing to a 30-year Treasury auction that priced at 5.22%, the highest since 2001, which he linked to persistent fiscal deficits rather than Fed policy. He also urged Fed Chair Kevin Warsh to use his Jackson Hole address, set for Aug. 27-29, to explain the July decision given the size of the dissent.
Sources: Investinglive, Investinglive, crypto.news
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