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• High rates are creating stickiness in housing and withdrawn some supply, but that is not behind housing inflation puzzle.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 www.forexlive.com.