Federal Reserve's Goolsbee: September inflation disappointing, more data needed before interest rate hikes

Chicago Federal Reserve President Austan Goolsbee said U.S. September inflation data coming in higher than expected is disappointing, particularly as services inflation remains above 5% and core goods prices failed to cool as anticipated, indicating inflationary pressures may be more persistent than previously assessed. He noted that if core inflation continues to hold at an annualized monthly rate of around 4%, that would be completely unacceptable and the Fed must take policy action. Goolsbee added that it remains unclear whether current interest rates are sufficient to bring inflation back to the 2% target, and he leans toward waiting for more data before deciding on further rate hikes. However, if inflation data stays at current levels in the coming months, the Fed cannot afford to stand idly by. He stressed that the latest data further confirms inflation is not a temporary phenomenon and is declining more slowly than previously expected. Goolsbee also pointed out that the U.S. labor market is very stable, economic growth is strong, consumer spending is robust, and AI investment could potentially drive the economy to overheat further. He said businesses in his district are barely signaling recession risks, instead generally focusing on rising costs and prices, so he is more concerned about demand overheating than supply shocks. Goolsbee emphasized that if the labor market remains stable and inflation stays above the target and moves in the wrong direction, the Fed must take action to prevent the economy from overheating further.