Chicago Fed's Goolsbee on inflation: 'Lately it's been going the wrong way'

Chicago Fed President Goolsbee discusses the difficulty of finding a 'through line' on inflation. While some recent price pressures from tariffs and wars may be temporary, persistent services inflation remains a key concern. He notes some recent improvement in services inflation but emphasizes the Fed must keep watching the data, as inflation is currently the primary problem relative to the labor market.

implicit

Oil

Metals

USD

services inflation (cautious up)

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Austan Goolsbee 8.5

Chicago Fed's Goolsbee on inflation: 'Lately it's been going the wrong way'

US 10y; Fed funds; CPI

ndx

Persistent inflation and potential for higher-for-longer rates is negative for growth stocks and tech valuations.

rut

Small caps are more sensitive to interest rates and inflation; a hawkish Fed stance would weigh on the Russell 2000.

yields

Goolsbee says inflation is going the wrong way and is the primary problem, implying the Fed may need to keep rates higher for longer, which would push yields up.

Austan Goolsbee

It's hard to get the through line on inflation—how persistent and how temporary the recent hikes are. The Fed has an inflation target of 2% and we've been above that for five straight years.

People trading futures are trying to figure out the through line on inflation.
Four is not two. Why didn't he tell you that?

Unknown (Speaker2)
Austan Goolsbee

We've had periods of progress on inflation, then stalled, and lately it's been going the wrong way. Some of that is driven by hopefully temporary events like wars and tariffs, which are supposed to be one-and-done.

The more disturbing part is on the services side, because that elevated inflation is not coming from tariffs or oil prices.
Austan Goolsbee

We need to keep watching these numbers. It wasn't all negative—there has been a little improvement on services inflation, which I've been identifying as something we'd want to see.

Right now, between the two sides of the Fed's mandate—inflation and the job market—clearly the problem is on the inflation side.

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