During Thursday’s discussion, Chicago Federal Reserve President Austan D. Goolsbee emphasized that basing an entire monetary policy decision on a solitary month of inflation data would be insufficient.
Key highlights
Despite the positive rebound observed in January PCE data, it’s crucial to exercise caution in making extrapolations. The Federal Reserve has indeed made noteworthy progress in addressing long-term inflation concerns. However, we should approach arguments asserting that the supply chain issues are completely resolved with care, and any further benefits in 2024 should not be assumed.
Acknowledging the likelihood of prolonged lags in responding to labor supply shocks, Fed’s Goolsbee remains focused on understanding why housing inflation hasn’t experienced a more pronounced decline. Additionally, he highlights the potential impact of substantial productivity growth on monetary policy considerations.
Highlighting the time-consuming nature of the impacts of supply shocks on inflation, Goolsbee suggests that the full benefits of supply chain improvements on disinflation may still be on the horizon.
