Chicago Federal Reserve President Austan Goolsbee said the central bank likely needs to take action to address persistent inflation, expressing concern about the latest economic data in an interview with CNBC on Friday. Goolsbee stated that the Fed has work ahead to restore its credibility after inflation has remained above the 2% target for almost six years.
The producer price index, a measure of wholesale prices, rose 0.3% in October according to the Bureau of Labor Statistics, slightly below expectations but showing a 6.5% annual gain, the highest since November 2022. Earlier in the week, consumer price data also came in higher than expected, prompting Goolsbee to conclude that the central bank is moving further from its inflation target. He noted that while progress was sometimes made in the past, recent trends are worsening rather than improving.
Goolsbee attributed the persistence of inflation to multiple factors. Beyond the supply shocks that initially drove price increases, he pointed to demand pressures from artificial intelligence data center buildout, which he suggested is beginning to spread beyond its sector. The policymaker said inflation has proved far more durable than the Fed initially anticipated.
When asked directly about the path forward, Goolsbee declined to speculate on whether the Fed might need to be more aggressive but emphasized uncertainty about inflation's trajectory. "My feeling is, right now we're not" on pace to return to the 2% target, he said.
Markets are fully pricing in a 0.25 percentage point rate increase when the Federal Open Market Committee meets on December 8 and 9, with the CME Group's FedWatch gauge showing slightly more than a 10% probability of a half-point hike. Fed Governor Christopher Waller earlier indicated he would consider a 50 basis point move depending on this week's inflation data. Goolsbee, who is not currently an FOMC voter but will be in 2027, did not commit to either path.