Fed's Goolsbee says hot inflation readings 'should not knock us off path' back to 2% target
By Greg Robb
Bigger workforce should benefit core services inflation, Chicago Fed president says
The last two months of inflation data are not a sign that the Federal Reserve's efforts to get inflation back to 2% have failed, Chicago Fed President Austan Goolsbee said Thursday.
While not "purely noise" given that they've lasted for two months, "my overall assessment is that these two months should not knock us off the path back to target," Goolsbee said, in remarks prepared to be presented at a business luncheon in Chicago.
Looking forward, large increases in labor force participation and immigration should start to bring down core services inflation, he said.
Goolsbee said the biggest danger to his outlook was continued inflation in housing services, which continues to run much higher than before the pandemic.
"I have been expecting it to come down more quickly than it has. If it does not come down, we will have a very difficult time getting overall inflation back to 2%," he said.
Overall, Goolsbee continued to lean dovish, as he dismissed fears from some that the economy was overheating. He said the current level of rates, in a range of 5.25%-5.5%, adjusted for inflation, are high by historic standards.
He said he was worried the labor market might start to buckle if the Fed keeps rates so high.
The Chicago Fed president, who is not a voting member of the Fed's interest-rate committee this year, said last week that he expects three interest rate cuts this year.
-Greg Robb
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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04-04-24 1310ET
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