Fed’s Goolsbee: CPI was borderline disturbing on inflation

Speaking in an interview on PBS Newshour early Wednesday, Chicago Federal Reserve President Austan Goolsbee said that “CPI was borderline disturbing on inflation.”

Additional comments

Most troubling is that services inflation is not coming down.

We have a real inflation issue on our hands.

We are going to have to deal with that.

Inflation is cost side and demand side driven.

Business investment does get affected by interest rates.

My fear is starting to see overall overheating prices of a whole bunch of things.

At the same time job market is steady and stable.

We are going to have to come to terms with it, if inflation stays persistent.

It's a major concern if inflation gets built into expectations.

Everything is always on the table, and we must get inflation down to target.

Goolsbee flags ‘real inflation issue,’ lifting hawkish Fed tone and supporting the Dollar

Fed’s Goolsbee delivered a distinctly more hawkish tone, with an 8/10 FXS Speechtracker score standing notably above the 6.8/10 historical average and underscoring heightened concern about price pressures. The emphasis that the latest CPI was “borderline disturbing,” with services inflation “not coming down,” and the warning of “a real inflation issue on our hands” signal growing discomfort with persistent inflation and a lower bar for additional tightening or a longer period of restrictive policy. Repeated references to overheating prices, the risk of inflation expectations becoming entrenched, and the assertion that “everything is always on the table” reinforce a message that keeps rate-hike optionality alive and is broadly supportive for the Dollar.

The FXS Fed Sentiment Index rose by 1.69 points to 145.61, confirming a clear shift deeper into hawkish territory and aligning with the above-baseline FXS Speechtracker score. With the index far above the neutral 100 mark, markets are likely to interpret Goolsbee’s remarks as validating expectations for a prolonged higher-for-longer stance, a backdrop that typically underpins the Dollar against lower-yielding peers.