- Inflation has spread into categories where prices not driven by energy
- The jobs market looks stable, if not tightening a bit
- Rates will eventually go well-below today
- We have had signs of trouble for several months in a row now
- Lately we’re not making any progress and if anything, it’s going the wrong way
- Inflation is rising and proving far more persistent than expected when it was just a matter of supply shocks
- The Fed “definitely has work to do” to maintain its credibility
- Services inflation and rising health care costs don’t feel like they will change quickly
- Even if the price of oil goes down rapidly, refining capacity is still very problematic
- My feeling is that right now we’re not on the way to 2% and we have to deal with that
- Demand-overheating inflation shocks are extremely hard to get rid of
- Until about six months ago I thought AI overheating was staying in its lane; I’ve begun to change that view
- The tariff and oil price shocks were supposed to have gone away by now
This is the guy who used to be the most reliable dove on the FOMC. He’s now talking about demand overheating and Fed credibility.
He was pushed on 25 bps versus something faster in December and wouldn’t bite, but he didn’t push back on the premise either. He was also asked about Bessent’s warning, which invoked the ECB hiking in 2008 right before the financial crisis. He was polite about it and then went straight back to inflation persistence.
There’s an out here. If tariffs, oil and the AI squeeze all ease, he’s comfortable going slow. But he’s not forecasting that, he’s hoping for it. Goolsbee votes in 2027.
This article was written by Adam Button at investinglive.com.