Chicago Fed President Goolsbee said even if oil prices fall rapidly, refinery
capacity constraints will keep diesel and jet fuel prices elevated. He warned
inflation is spreading into categories not driven by energy costs and that an
overheating of demand could not be ignored by the Fed. Goolsbee pointed to
data-center demand as a driver of higher prices and said services inflation and
rising healthcare costs are unlikely to retreat quickly. He added the Fed is not
currently on a path back to 2% inflation and would need to act to prevent demand
overheating; worsening inflation data would prompt more aggressive policy
action.
