CHICAGO — Chicago Federal Reserve President Austan Goolsbee described the latest inflation report as “borderline disturbing,” warning that persistent price increases could make it more difficult for the central bank to bring inflation under control.
“It’s another distressing report — borderline disturbing,” Goolsbee said in an interview with PBS NewsHour, according to CNBC. “We’ve got a real inflation issue on our hands that has been developing. We’re going to have to deal with that.”
The consumer price index rose a seasonally adjusted 0.4% in October, exceeding economists’ forecasts and marking a third consecutive month of elevated price increases, according to the Bureau of Labor Statistics report cited by CNBC. Core consumer prices, which exclude food and energy, increased 0.3%.
Goolsbee said tariff-related price pressures had not eased as he had hoped and that persistent services inflation remained troubling. He said high prices were a concern for businesses, nonprofit organizations and consumers.
“It’s on everyone’s mind,” he said.
Intensified Questions
The report intensified questions about whether the Federal Reserve will raise its benchmark interest rate in December and, if so, by how much. The Fed increased rates by a quarter-percentage point in September, bringing its target range to 3.75% to 4%, and held rates steady in October.
According to CNBC, Fed Gov. Christopher Waller said Tuesday before the inflation data were released that a core CPI increase of about 0.3% could justify considering a half-percentage-point rate increase in December. The subsequent report matched that threshold.
Dallas Fed President Lorie Logan said she favored two additional quarter-point increases and suggested policymakers might need to move more quickly this winter. Philadelphia Fed President Anna Paulson, while acknowledging continued inflation pressures, favored a more gradual approach.
“For now, further gradual tightening seems appropriate,” Paulson said, according to CNBC. “The exact path will depend on how conditions evolve, and I’ll be watching the data closely.”
Goolsbee also warned that prolonged inflation could cause households and businesses to expect prices to keep rising rapidly, making inflation harder and more painful to reduce. He did not endorse a specific action for the December meeting.
‘Not a Fan’
“I’m not a fan of being very specific and tying our hands at the next meeting or meetings in the future,” he said.
Waller, Logan and Paulson are voting members of the Federal Open Market Committee this year. Goolsbee is scheduled to vote next year.
Following the report and policymakers’ comments, federal funds futures indicated expectations for a December rate increase, CNBC reported, citing CME Group’s FedWatch tool. The market assigned a 15% probability to a half-point increase in December and a 60% probability that rates would reach 4.25% to 4.5% by January. Those probabilities can change as new data emerge.
