Austan Goolsbee, president and chief executive officer of the Federal Reserve Bank of Chicago. David Paul Morris—Bloomberg/Getty Images
Federal Reserve officials welcomed the latest data showing receding US inflation, while adding that there’s still a way to go before it reaches the central bank’s 2% target.
“Progress continues, though we still have a way to go,” Chicago Fed President Austan Goolsbee said Tuesday at an event in Detroit, after a monthly report on consumer prices revealed a broad slowdown in inflation in October.
“With goods inflation already coming down and nonhousing services inflation typically slow to adjust, the key to further progress over the next few quarters will be what happens to housing inflation,” Goolsbee said. “More generally, there are always some bumps in the road as inflation comes down.”
Richmond President Thomas Barkin, speaking earlier Tuesday, said he’s “just not convinced that inflation is on some smooth glide path down to 2%” despite “real progress” curbing price pressures in recent months.
“The inflation numbers have come down, but much of the drop has been partial reversal of Covid-era price spikes, which were driven by elevated demand and supply shortages,” Barkin said at an event in Westminster, South Carolina. “Shelter and shelter inflation remain higher than historic levels. So does services inflation.”
A Bureau of Labor Statistics report published Tuesday showed the so-called core consumer price index, which excludes food and energy costs, increased 0.2% from September, less than forecasters had been expecting.
Fed officials held their benchmark interest rate unchanged at a 22-year high earlier this month, marking the second straight policy meeting without an increase. Investors responded to Tuesday’s inflation numbers by marking down the chances of another rate hike to almost zero, according to futures.
Goolsbee also repeated previous remarks that “favorable” supply-side developments have helped to simultaneously cool inflation and boost economic growth and hiring. He said Fed officials should mostly focus on inflation data, given a lot of other uncertainties surrounding the economic outlook.
Barkin said the central bank is headed in the right direction, but recent data “shows an economy that seems remarkably resilient.”
The Richmond Fed chief added he was comfortable supporting the decision to keep rates on hold at the last Fed meeting, with rates restrictive and financial conditions tightening, echoing remarks he made at an event in New Orleans last week. The benchmark lending rate is currently in a range of 5.25%-5.5%.
Still, “businesses aren’t going to back down from prices until they have to,” which may require slower economic growth, he said. “I do see some sort of slowdown.”
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