Goolsbee says Fed has 'work to do' as producer prices rise 6.5%
Chicago Federal Reserve President Austan Goolsbee said the central bank "has definitely got work to do to continue to reestablish its credibility" on inflation, after wholesale prices posted their fastest annual gain since November 2022.
The producer price index rose 0.3% in October, slightly less than expected, but the annual gain reached 6.5%, the Bureau of Labor Statistics reported. The reading landed days after consumer price data came in a bit above expectations, and Goolsbee said the Fed is slipping further from its 2% target. "We've been above 2% for almost six years, and while it sometimes we were making progress, lately we're not making any progress, and if anything, it's going the wrong way," he said.
Goolsbee pointed to a new driver alongside earlier supply shocks: demand overheating from the AI data centre buildout, which he said "looks like it's starting to spread out of its lane." He did not say whether the Fed should move more aggressively, framing the question as whether inflation is on a path back to 2%. "My feeling is, right now we're not," he said.
Markets are fully pricing a quarter-point increase at the Federal Open Market Committee's December 8-9 meeting, with a better than 10% probability of a half-point hike, according to CME Group's FedWatch gauge. Goolsbee is not currently an FOMC voter but will be in 2027. Fed Governor Christopher Waller said earlier in the week he would entertain a 50 basis point move depending on the inflation data.
