Recently, as U.S. inflation remains persistently elevated, a growing number of Federal Reserve officials have signaled a hawkish stance.
Chicago Fed President Austan Goolsbee stated on Monday that the Fed has been contending with inflation running well above target and moving in the wrong direction.
He questioned whether the factors driving price increases are all merely transitory, with particular concern over persistently high services inflation.
June 23 (Xinhua) – Chicago Fed President Austan Goolsbee said on Monday that he remains concerned about inflation and questioned whether the forces pushing up prices are all temporary.
He indicated that, with the labor market remaining stable, his current focus is on determining whether excessive inflation will persist or ease as the effects of high tariffs fade and the Middle East conflict is resolved.
“We have been dealing with inflation that is well above target and moving in the wrong direction,” Goolsbee said in an interview with Marketplace radio.
“What I keep thinking about is what evidence would suggest inflation is temporary and that we will get back on track toward 2%, which is our stated goal,” he added.
Fed officials left interest rates unchanged last week, but projections released after the meeting showed that nearly half of the officials anticipate at least one rate hike this year. With inflation having failed to return to the Fed’s 2% target for more than five consecutive years and having accelerated over the past few months, concerns have grown among officials that maintaining the current rate level may be insufficient to restrain price pressures.
Driven by higher energy prices resulting from the war with Iran, the U.S. Consumer Price Index (CPI) rose 4.2% year-on-year in May, surpassing the 4% threshold for the first time in three years and marking the fastest pace since May 2023, even outpacing wage growth for American workers.
Goolsbee stated that it is crucial for the Fed to assess whether temporary shocks, such as tariffs or energy price surges stemming from the Iran war, are the sole factors pushing up prices.
He noted that he is particularly focused on persistently high services inflation, which is not directly linked to oil price increases from the Iran war or tariff-driven rises in goods prices.
“There are some signs that part of the inflation comes from tariffs, and that should be one-off; and a resolution in the Middle East could also make related inflationary pressures disappear,” Goolsbee said. “But we are also seeing inflation in services, and historically, services inflation tends to be more persistent, which is somewhat concerning.”
Goolsbee also stated that he understands Fed Chair Warsh’s perspective that the central bank should not provide excessive guidance regarding the future path of interest rates. He noted that erroneous forecasts about the economic outlook could undermine the central bank’s credibility.
Recently, as U.S. inflation remains elevated, an increasing number of Federal Reserve officials have signaled a hawkish stance. Minneapolis Fed President Neel Kashkari reiterated last Thursday that reducing inflation remains his top priority and warned that consumer prices are still “too high.”
