Fed’s Goolsbee Calls CPI Inflation Reading Borderline Disturbing

“CPI was borderline disturbing on inflation.” Chicago Federal Reserve President Austan Goolsbee made the comment during an interview on PBS Newshour early Wednesday.

Further remarks

The failure of services inflation to decline is the most troubling aspect.

The inflation problem we face is real.

That is something we will have to address.

Both costs and demand are driving inflation.

Interest rates do affect business investment.

I fear we are starting to see broad overheating in the prices of a whole range of things.

Meanwhile, the labour market remains stable and steady.

If inflation persists, we will have to come to terms with it.

Inflation becoming embedded in expectations would be a major concern.

We must bring inflation back to target, and all options remain on the table at all times.

Goolsbee’s Inflation Warning: More Hawkish Fed Tone Supports Dollar

8/10 was Fed’s Goolsbee’s FXS Speechtracker score. Well above the historical average of 6.8/10, the reading highlights a distinctly more hawkish tone and greater concern over price pressures. His description of the latest CPI as “borderline disturbing,” alongside services inflation “not coming down,” and his warning of “a real inflation issue on our hands” point to mounting unease over persistent inflation. Together, these remarks suggest a lower threshold for further tightening or a longer stretch of restrictive policy. His repeated warnings about overheating prices and entrenched inflation expectations, coupled with the assertion that “everything is always on the table”, keep rate increases as an option. The overall message is supportive of the Dollar.

145.61 was the FXS Fed Sentiment Index reading after a rise of 1.69 points. The increase confirms a clear move further into hawkish territory, consistent with the above-baseline FXS Speechtracker score. The index remains well above the neutral 100 mark. Markets are therefore likely to view Goolsbee’s comments as reinforcing expectations that interest rates will stay higher for longer, a setting that typically supports the Dollar against lower-yielding currencies.