- Chicago Federal Reserve Bank President Goolsbee said on Thursday that underlying inflationary pressures in the United States remain too high and are not improving, although there is a glimmer of hope in the latest inflation report regarding service sector inflation.
- "If you look at core inflation, it is still significantly too high and not improving, and we need to see improvement in this area," Goolsbee said in an interview with CNBC. "Currently, in the two aspects of the Fed's dual mandate—inflation and the job market—the problem is clearly on the inflation side."
- Goolsbee declined to comment on whether the Fed should raise interest rates or maintain the current level, stating that he agrees with Fed Chair Walsh's view that speculation about the future path of interest rates should be minimized.
Walsh stated that at the Fed meeting on June 16-17, no one advocated for a rate hike, but the forecasts released after the meeting showed that out of the 18 Fed policymakers who submitted interest rate path forecasts, nine believed a rate hike would be necessary by the end of the year. Walsh did not submit a "dot plot" forecast and indicated that these forecasts were penciled in, suggesting that they could easily change as economic data evolves.
Goolsbee stated that his view on interest rates will depend on economic performance. He reiterated that he is a "data person" and will carefully study various economic reports. His current focus is on determining whether the rise in inflation is driven by persistent factors or temporary ones, including tariffs raising commodity prices and the war triggered by U.S. and Israeli attacks on Iran leading to higher gasoline prices and prices of goods affected by fuel costs.
"Oil prices have risen sharply, and hopefully, they will fall back quickly," Goolsbee said.
However, he noted that service sector inflation remains too high, and although wage growth has slowed, it does not guarantee that inflation will ease as a result. (End)
