Inflation is refusing to cool, and the nation's central bank knows it. Chicago Federal Reserve President Austan Goolsbee said the Fed still has serious work ahead to win back public trust on prices, pointing to a fresh wholesale inflation report showing a monthly increase slightly less than expected and a consumer price reading from earlier in the week that also topped forecasts.
“The central bank has definitely got work to do to continue to reestablish its credibility,” Goolsbee said, according to CNBC. The comment followed a producer price index report showing prices for final demand rose 0.3% in October, according to the U.S. Bureau of Labor Statistics. On an annual basis, CNBC reported the index climbed 6.5%, the highest reading since November 2022.
Goolsbee did not mince words about how far off track things have drifted from the Fed's 2% target. “We've been above 2% for almost six years ... lately we're not making any progress,” he said, per the outlet's report. Asked directly whether inflation is currently heading back toward that target, his answer was blunt: “My feeling is, right now we're not.”
A Pattern of Hot Readings
October marked the third straight month of outsized price increases, the station's report noted, and Goolsbee has been sounding the alarm in public remarks for days. Two days earlier, he described the latest consumer inflation data as “another distressing report — borderline disturbing,” per the same account. The consumer price index had already risen more than expected during October, according to CNBC, adding to the sense that price pressures are broadening rather than fading.
Goolsbee said inflation is rising and has proved far more persistent than policymakers predicted after the supply shocks of recent years. He pointed specifically to services inflation as a growing concern, telling Semafor that “you've seen inflation in services kicking up and that's not really from tariffs, that's not really mostly from oil.” In separate comments reported by Yahoo Finance, Goolsbee described the moment as precarious, citing persistent price pressures in services and healthcare that are unrelated to tariffs or oil.
AI Buildout Under Scrutiny
One thread running through Goolsbee's recent commentary is the construction boom tied to artificial intelligence data centers. He said demand overheating connected to that buildout appears to be starting to spread beyond its original footprint, as reported by CNBC, warning it looks like it's spreading out of its lane. That marks a shift in tone from a day earlier, when Yahoo Finance reported Goolsbee saying inflation tied to AI had not yet spilled over into the broader economy, even as policymakers watch closely for signs that it might.
Bloomberg reported Goolsbee saying policymakers need to address the potential for overheating from the AI build-out alongside the broader spread of inflation pressures. He also said the central bank likely needs to take action on inflation, according to his CNBC interview, and reiterated that the institution needs to restore its credibility after years of missing its target.
What It Means for the December Meeting
Goolsbee is not currently a voting member of the Federal Open Market Committee, though he is set to gain a vote in 2027, a detail CNBC's report made clear. His remarks nonetheless carry weight ahead of the committee's next meeting, scheduled for December 8-9. Markets are fully pricing in a quarter-percentage-point rate increase at that meeting, with a better-than-10% probability assigned to a half-point hike, according to CME Group's FedWatch gauge as cited in CNBC's reporting.
The debate over how aggressively to respond is playing out among other Fed officials as well. Fed Governor Christopher Waller has indicated he would consider a 50 basis point move depending on how that week's inflation data looks, according to CNBC's reporting. With producer prices running at their hottest annual pace in years and consumer prices also surprising to the upside, markets are pricing in a hike heading into December, but the Fed has not decided whether to act or how forcefully.
