Chicago Fed president Austan Goolsbee said Friday that “progress on inflation has stalled” and that “it makes sense to wait” before cutting rates.
“You never want to make too much of any one month’s data, especially inflation, which is a noisy series,” Goolsbee said in remarks prepared for a speech before the Society for Advancing Business Editing and Writing’s annual conference. “But after three months of this, it can’t be dismissed.”
The Consumer Price Index (CPI) for March showed inflation was hotter than expected for the third month in a row.
“Right now, it makes sense to wait and get more clarity before moving,” he added.
The comments were notable because previously, Goolsbee had been one of the more dovish members of the Fed, known for his view that the Fed was on a “golden path” to getting inflation down without high unemployment.
Goolsbee became the fourth Fed official this week to strike a more hawkish stance due to hotter-than-anticipated inflation data in the first quarter.
It started with Fed Chair Jay Powell, who said Tuesday that it will take “longer than expected” to achieve the confidence needed to get inflation down to the central bank’s 2% target.
“Given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” Powell said at an event in Washington on the Canadian economy.
On Wednesday, Cleveland Fed president Loretta Mester said the central bank doesn’t need to cut rates in a “hurry.” She had said previously that she expected to cut rates three times later this year.
Then, on Thursday, New York Fed president John Williams said he doesn’t see any “urgency” to cut interest rates, making comments that were more cautious than his stance earlier this week.
Goolsbee on Friday said he is particularly focused on housing prices, which are still much higher than they were pre-pandemic.
He warned that market data for rents on new leases should have been falling by now and that if it doesn’t, it will be “hard to see a smooth path back” to the Fed’s 2% inflation goal.
He also pointed out the strength of the economy in general, with strong jobs and GDP data.
“We need to determine if this is a sign of overheating driving up inflation,” he said. “Ultimately, the proper policy going forward will depend on the data.”
At the moment, “progress on inflation has stalled.”
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