More Goolsbee:If the Fed sees lack of progress on the price side, it will have to tighten

More from Fed’s Goolsbee is on the wires saying:

  • If Fed sees lack of progress on the price side, it will have to raise restraint.
  • Trying not to put much weight on conventional measures of overheating
  • Have not decided what to do at the next meeting
  • Recent inflation was mostly supply though there was a demand component
  • The Fed will have a legitimate debate about how the current framework worked in this period of inflation
  • Inflation targets do risk giving a false sense of precision around a variable that is noisy
  • It will matter a lot how long auto strike lasts in terms of its GDP impact
  • Auto strikes have not had a historical large impact on inflation. However current capacity and inventory situation is different
  • Fed is trying to get a handle on whether an extended strike might lead to different price outcomes
  • Have not been a big fan of an explicit fed target
  • Once Fed his back to 2% target or on a clear path to it, then it would be perfectly appropriate to discuss the target itself.
  • If long continues to increase, Fed will have to take account of that as a form of tightening

Goolsbee is more of a dove. He is a voting member on the board this year.

This article was written by Greg Michalowski at Source