Chicago Federal Reserve President Austan Goolsbee declared inflation the “biggest problem” for the U.S. economy, reinforcing the central bank’s hawkish posture and weighing on risk assets. His comments, released on August 11 from a June discussion, came as the Fed maintained rates at 3.50%–3.75% in July, with three policymakers dissenting in favor of a 25-basis-point increase.
Goolsbee described the labor market as “stable, without being good,” but stressed that rapidly rising prices cause more damage. The annual Consumer Price Index stood at 3.5% in June, well above the Fed’s 2% target, while core CPI was 2.6%. Upcoming July CPI data, due August 12, is expected to show a slowdown to 3.4% headline and 2.5% core.
Geopolitical tensions added to inflation fears: the Strait of Hormuz closure continued to disrupt oil supplies, and Iranian official Mohsen Rezaei said it would remain shut unless U.S. conditions were met. Crude oil prices climbed, pushing Bitcoin down roughly 2% to $63,780 on August 11 after briefly trading above $65,000. U.S. spot Bitcoin ETFs recorded $144.6 million in net outflows on August 10, snapping a five-day inflow streak.
Minneapolis Fed President Neel Kashkari and others warned that elevated inflation and the Iran conflict might force the central bank to raise rates further. Market-implied odds of a September hike stood at 59%, while a separate contract gave a hike before year-end the same probability. Analysts noted that risk assets like Bitcoin face headwinds from higher Treasury yields and a stronger dollar as long as inflation remains stubborn.
