MNI: Goolsbee Says Stalled Inflation Means Wait Before Moving
Chicago Fed president says current restrictive monetary policy is appropriate.
Chicago Federal Reserve President Austan Goolsbee said Friday "it makes sense to wait and get more clarity before moving" because inflation progress has stalled over the last three months, joining a substantial group of his peers walking away from March's dot plot that had indicated three interest-rate cuts this year.
The recent run of inflation data "can't be dismissed," he said in prepared remarks to the Society for Advancing Business Editing and Writing. Price gains appear to be coming more from stubborn housing costs, he said, rather than a broad overheating of an economy still benefitting from supply chain improvements.
"Given the strength of the labor market and progress on easing inflation seen over a longer arc, I believe the Fed’s current restrictive monetary policy is appropriate. Ultimately, the proper policy going forward will depend on the data," he said. (See: MNI INTERVIEW: Fed Only Likely To Cut Once This Year- Giannoni)
While historically inflation can settle at the Fed's 2% target even if some components run above that mark, housing pressures are troubling, Goolsbee suggested. "Looking at market data on rents for new leases, it is supposed to have been falling. If it doesn’t, it will be hard to see a smooth path back to our 2% inflation goal."