Federal Reserve Bank of Chicago President Austan Goolsbee speaks at the Council on Foreign Relations in New York, the United States, February 14, 2024.
Staff | Reuters
“If you take a big picture view, inflation is well above where we were comfortable and it has come down a lot,” he said.
The first three readings this year indicate that covering the remaining distance at 2% “might not be as fast,” he added.
This “hang” merits further investigation into the direction of the economy before the Fed decides to cut rates, said Goolsbee, who is a non-voting member this year of the Federal Rate-Setting Committee.
He described himself as a “proud data dog” and emphasized what he says is “the first rule of the kennel.”
“If you’re not clear, stop walking and start sniffing,” he said. “And with these numbers, we need to do more sniffing.”
“We want to have confidence that we are on the path to 2 (%),” he said. “This is what we need to pay attention to.”
Housing inflation is a key area to watch, Goolsbee said.
“This is the one that didn’t behave the way we thought it would,” he said.
Housing costs, which account for about a third of the CPI’s weighting, rose 5.7% in March from a year ago.
“Market rent inflation is indeed falling, but it has not been reflected in official measures,” he said. “If it doesn’t – I still think it will – but if it doesn’t, I think we’re going to struggle. It will certainly be more difficult to achieve an overall rate of 2% if we don’t see progress.”
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