Federal Reserve signals more inflation-fighting work as price pressures intensify
Fresh inflation data is sharpening concerns inside the Federal Reserve as price growth shows signs of broadening rather than easing. Chicago Fed President Austan Goolsbee says the central bank is moving farther from its 2% target, underscoring expectations that policymakers may need to tighten further.
Highlights
- Chicago Fed President Goolsbee states the Federal Reserve has 'work to do' as October producer price index rises 0.3%, up 6.5% annually.
- Inflation is spreading and diverging from the 2% target, boosted by persistent pressures and demand linked to AI data center construction.
- Markets fully price in a 25 basis point hike for the Dec. 8-9 FOMC meeting, while Fed Governor Waller signals potential for a 50 basis point move.
Inflation data and policy outlook
As reported by CNBC, Goolsbee says the central bank "has definitely got work to do" to restore its credibility on inflation after recent data pointed to renewed price pressure.Speaking in an interview, the Chicago Fed president says inflation is beginning to spread and that the latest readings suggest policymakers are not making progress back toward target. He says the Fed is slipping further away from its 2% goal after being above that level for nearly six years.
His comments follow Bureau of Labor Statistics data showing the producer price index rises 0.3% in October, leaving it up 6.5% on an annual basis, the highest since November 2022. Goolsbee says inflation is proving more persistent than policymakers predicted, while demand linked to AI data center construction is adding overheating pressure.
Market expectations and broader Fed debate
Markets are fully pricing in a quarter-point increase at the Federal Open Market Committee meeting on Dec. 8-9, reflecting investor expectations that policymakers will need to respond to stubborn inflation.Goolsbee does not currently vote on the FOMC, though he will in 2027. Earlier in the week, Fed Governor Christopher Waller says he would consider a 50 basis point move depending on the inflation data, adding to signs that the policy debate is centering on whether price growth is still moving away from, rather than toward, the Fed's target.
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