By Ann Saphir
June 25 (Reuters) – Chicago Federal Reserve President Austan Goolsbee on Thursday said there was a “glimmer of hope” on services inflation in the latest U.S. inflation report, but underlying inflation pressures are still too high and trending the wrong way.
“If we look at core inflation, it’s still well too high and it’s trending the wrong way, and we’ve got to see improvement on that,” he said in an interview on CNBC. “Right now, as between the two sides of the Fed’s mandate – the inflation side and the job market side – clearly the problem’s on the inflation side.”
Goolsbee declined to say whether the Fed should raise interest rates or continue to hold them where they are, saying he agrees with Fed Chairman Kevin Warsh on trying not to feed speculation over the future rate path.
Warsh said no one at the Fed’s June 16-17 meeting was advocating for a rate hike, but projections published at the end of the meeting showed that nine of 18 Fed policymakers submitting a rate-path projection felt rates would need to rise by the end of this year. Warsh did not submit a projection for the “dot plot” chart and said that projections were submitted in pencil, a suggestion that they could easily change as economic data changes.
Goolsbee said his views on rates will be driven by how the economy plays out, referring again to himself as a “data dog” who studies reports in detail. His focus now, he said, is on figuring out if inflation’s rise is driven primarily by factors that will be persistent or likely temporary, including a boost to goods prices from tariffs and a jump in gas prices and fuel-sensitive items due to the U.S.-Israeli war with Iran.
“Oil prices have been way up, they may go down rapidly, hopefully,” Goolsbee said. But services inflation is too high, he said, and while wage growth has moderated, there’s no guarantee inflation will ease.
(Reporting by Ann Saphir; Editing by Chris Reese and Paul Simao)
