Fed’s Goolsbee describes CPI inflation reading as borderline disturbing

Inflation concerns were at the centre of remarks by Chicago Federal Reserve President Austan Goolsbee, who said that “CPI was borderline disturbing on inflation.” He was speaking in an interview on PBS Newshour early Wednesday.

What else did Goolsbee say?

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

The inflation problem we face is real.

That is something we will have to address.

Both cost-side and demand-side factors are driving inflation.

Interest rates do influence business investment.

I am worried that we are starting to see broad-based overheating in the prices of many things.

Meanwhile, the labour market remains stable and steady.

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

Inflation becoming embedded in expectations is a major concern.

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

Dollar supported as Goolsbee’s ‘real inflation issue’ warning sharpens hawkish Fed tone

Support for the Dollar emerged from the distinctly more hawkish message delivered by Fed’s Goolsbee. His FXS Speechtracker score of 8/10 was notably higher than the historical average of 6.8/10, highlighting increased concern over price pressures. Describing the latest CPI as “borderline disturbing,” stressing that services inflation is “not coming down,” and 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 an extended period of restrictive policy. The possibility of rate hikes remains open, with repeated warnings about overheating prices and entrenched inflation expectations, alongside the assertion that “everything is always on the table”. This message is broadly supportive of the Dollar.

A move further into hawkish territory was confirmed by the FXS Fed Sentiment Index, which advanced 1.69 points to 145.61, consistent with the above-baseline FXS Speechtracker score. Standing well above the neutral 100 mark, the index suggests markets are likely to view Goolsbee’s comments as reinforcing expectations that rates will remain higher for longer over a prolonged period. Such conditions typically lend support to the Dollar against lower-yielding currencies.