Goolsbee Warns Persistent Inflation Risks Could Complicate Any Fed Rate Cuts
Federal Reserve Bank of Chicago President Austan Goolsbee said the Fed should not reflexively lower interest rates in response to faster productivity growth, warning that stronger productivity can sometimes add to inflation. He said inflation has failed to keep cooling toward the central bank’s 2% target and has moved up since the start of the US war in Iran.
Goolsbee said prolonged high oil prices could embed higher inflation expectations, and that a sustained move in the wrong direction on prices would force a reassessment of monetary policy strategy. Separately, Fed officials said rising supply-chain risks are fueling concern that inflation could prove more persistent, potentially complicating any move toward easing.
From the sources (6 posts)
@businessChicago Fed President Austan Goolsbee warned against reflexively lowering interest rates in response to faster productivity growth, as the phenomenon can sometimes drive up inflation
@financialjuiceFed's Goolsbee: If AI is as good as advertised, it would be lovely, but the Fed still needs to be on the lookout for overheating.
@businessFederal Reserve Bank of Chicago President Austan Goolsbee struck a note of caution about inflation that has not only failed to continue cooling to the US central bank’s 2% target, but has moved up since the start of the US war in Iran. http
@firstsquawkFED’S GOOLSBEE says prolonged high oil prices could embed higher inflation expectations, which would be highly concerning
@firstsquawkFED’S GOOLSBEE says a sustained move in the wrong inflation direction would force a reassessment of monetary policy strategy
@reutersFed officials say rising supply chain risks fuel concern of more persistent inflation