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%

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.