Chicago Fed President GOOLSBEE said US September inflation surprised to the
upside: core services inflation remains above 5% and core goods price gains have
not eased as expected, implying inflation may be more persistent. He warned that
if core inflation stays at a monthly annualized pace near 4% it would be wholly
unacceptable and require policy action. GOOLSBEE said it is unclear whether
current rates are sufficient to return inflation to the 2% target and he favors
waiting for more data before deciding on further hikes, but cautioned that if
inflation readings remain at current levels in coming months the Fed cannot
stand pat. He highlighted a very tight labor market, strong growth, robust
consumer spending and potential additional overheating from AI investment; firms
in his district report little recession risk and widespread concern about rising
costs and prices. If employment remains firm while inflation stays above target
and moves in the wrong direction, the Fed must act to prevent further
overheating.
