Fed President Goolsbee Warns Inflation Persistence Threatens Bank Credibility
Austan Goolsbee stated the Federal Reserve must act to reestablish credibility as AI-driven demand and supply shocks keep inflation above the 2% target.
Federal Reserve Bank of Chicago President Austan Goolsbee warned Friday that the central bank must take action to reestablish its credibility because inflation remains above the 2% target. Goolsbee noted that inflation has proven more persistent than predicted, attributing the trend to initial supply shocks and current demand overheating driven by AI data center buildouts.
These comments follow Bureau of Labor Statistics data showing a 0.3% increase in the October producer price index, which represents a 6.5% annual gain and the highest level since November 2022. While Goolsbee did not specify the exact scale of necessary aggression, Fed Governor Christopher Waller previously indicated he would consider a 50 basis point rate hike depending on inflation data.
Markets currently price in a quarter percentage point increase for the Federal Open Market Committee meeting scheduled for December 8-9.
