Chicago Fed Pres. Goolsbee: Feds inflation target acts as an anchor on expectations

Minneapolis Fed Pres. Kashkari invited Chicago Fed Pres. Goolsbee for a chat moderated by CNBC Liesman. It seems to be underway with comments starting to trickle in.

Chicago Fed Pres. Goolsbee:

  • Fed 2% inflation target next as in anchor on expectations
  • Short run inflation expectations aren’t what matters
  • Not surprised that one year expectations was higher
  • At this time not much evidence that inflation is stalling out at 3%.
  • We hit an inflation bulb this year and now we wait.
  • We need to sniff the data down.
  • We are relatively restrictive on policy.
  • Real fed funds rate is as high as it is been in decades.
  • I’m hesitant to focus too much on the recent inflation data.
  • I think we are restrictive on policy
  • Positive supply developments can make it hard to gauge if economy is overheating

As Chicago Fed Pres. Goolsbee/Kashkari speak, a snapshot of markets shows: Dow up 0.19%, S&P index unchanged and NASDAQ index -0.20%. The 2-year yield is 4.863% and the 10 year yield is at 4.502% (1:22 PM ET)

  • Increased immigration adds 80K monthly to jobs.
  • Given the uptick in inflation we have to wait and see on policy.
  • If the inflation uptick means overheating, the Fed has to do whatever it has to do to get to the 2% target.
  • Housing inflation remains a significant puzzle and challenge
  • If housing inflation comes down there will be an optimistic lane towards 2% inflation
  • Does not accept that we were stuck at the last mile of inflation.
  • Supply chain is mostly healed, but benefits of increase in the labor supply may last during 2024
  • High rates are creating stickiness in housing and withdrawn some supply, but that is not behind housing inflation puzzle.

This article was written by Greg Michalowski at Source