May 12 (Reuters) - Chicago Federal Reserve President Austan Goolsbee said on Tuesday that the government's report showing accelerating consumer inflation last month was unexpectedly disappointing.
Inflation is "going the wrong way, and it's going the wrong way not just in oil-related things and not just in tariff-related things," Goolsbee told the Greater Rockford Chamber of Commerce in Rockford, Illinois.
"The numbers today were mostly what was expected, but the unexpectedly disappointing part in my mind was on the services side," he said. "That's the part that I'm nervous about. I want to see that at least stop growing and hopefully start going back down because that can't really be from oil prices."
Here is more context and details:
U.S. consumer inflation rose 3.8% in April from a year earlier, its largest gain in three years, the Bureau of Labor Statistics said Tuesday.
The Fed in April held short-term borrowing costs steady in the 3.5-%-3.75% range. Goolsbee dissented because he disagreed with language in the Fed's post-meeting statement that he and several of his colleagues felt expressed an unwarranted bias toward rate cuts ahead.
"I want us to be cognizant that the job market is basically stable and inflation is going up," Goolsbee said on Tuesday. "We're not at this moment in a difficult balancing act between the two sides of the (Fed's) mandate. One side of the mandate is going wrong and the other side is not going. So in the short run, I want us to be cognizant of that."
Jerome Powell, whose last day as Fed chair is Friday, is a "first ballot Hall of Fame Fed chair," Goolsbee said, for steering the economy clear of a financial crisis during a tenure that spanned the COVID-19 pandemic and several large bank failures. Also, he said, "in 2023 we had a large drop in the inflation rate without a recession, which basically has never happened before, and it's done in the context that Fed independence has been under fire."
President Donald Trump last year made an unprecedented attempt to fire a sitting Fed governor in a case that is now before the Supreme Court, and he supported a now-closed criminal probe of Powell that a federal judge quashed as mere pretext to get Powell to cut rates or resign.
Kevin Warsh, Trump's pick to succeed Powell, on Tuesday was confirmed to the Fed Board of Governors and cleared a procedural hurdle in the Senate that will allow him to be confirmed as the Fed's next chair as soon as Wednesday.
Reporting by Ann Saphir; Editing by Mark Porter and Nick Zieminski
