Still A Way To Go Before Reach 2% Inflation Target - Goolsbee

Chicago Fed’s Goolsbee (’23 voter), who is typically at the dovish end of the FOMC spectrum, doesn’t jump on today’s CPI softer than expected print but is taking comfort from the recent strength in productivity growth.

• "We still have a way to go before we reach our 2% PCE inflation target".
• "The key to further progress over the next few quarters will be what happens to housing inflation. More generally, there are always some bumps in the road as inflation comes down."
• Productivity gains helping with disinflationary pressures: "Growth and employment gains have been so strong that some argue the economy is overheating and inflation is about to roar back. But with the positive supply developments, you can have blockbuster numbers without adding to inflationary pressures".
• "I’m struck by the seeming disconnect between the strong data we are seeing and what we are hearing from our business contacts. Nobody is saying they feel like this is an economy growing at 5%,"
• "My concerns aren’t so much about the economy overheating as they are about external shocks that could throw us off course," as was the case in 1990 and 2001, he said. You can get big quantities without inflation.