{"id":439045,"date":"2026-09-30T02:00:07","date_gmt":"2026-09-29T19:00:07","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/goolsbee-5-1-2-years-above-target-is-playing-with-fire-439045\/"},"modified":"2026-09-30T02:00:07","modified_gmt":"2026-09-29T19:00:07","slug":"goolsbee-5-1-2-years-above-target-is-playing-with-fire","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/goolsbee-5-1-2-years-above-target-is-playing-with-fire-439045\/","title":{"rendered":"Goolsbee: 5-1\/2 years above target is &#8220;playing with fire&#8221;"},"content":{"rendered":"<div>\n<ul dir=\"ltr\">\n<li>Price of oil could go down relatively quickly, but deeper problem is getting refineries back online<\/li>\n<li>The fact we have been 5-1\/2 years above inflation target is playing with fire<\/li>\n<li>Need to revisit the logic of looking through supply shocks<\/li>\n<li>Nothing in the Federal Reserve Act says make sure bond market is happy, stock markets aren&#8217;t surprised<\/li>\n<\/ul>\n<p dir=\"ltr\">Chicago Fed President Austan Goolsbee is sounding more like a hawk.<\/p>\n<p dir=\"ltr\">The key line is that the Fed needs to &#8220;revisit the logic of looking through supply shocks.&#8221; That&#8217;s a direct challenge to one of the core tenets of central banking. The textbook says energy shocks are temporary and you don&#8217;t tighten into them. Goolsbee&#8217;s point is that the textbook assumes inflation expectations are anchored, and after five and a half years above target, he&#8217;s not willing to make that assumption. He called it &#8220;playing with fire.&#8221;<\/p>\n<p dir=\"ltr\">WTI crude oil is down $2.29 on an SPR release today but releasing reserves to keep prices low is equally temporary.<\/p>\n<p dir=\"ltr\">Goolsbee also flagged that oil prices could retreat quickly but that refinery capacity is the deeper problem, which suggests he sees product prices staying elevated even if crude cools.<\/p>\n<p dir=\"ltr\">Goolsbee was a reliable dove earlier in his tenure but has steadily shifted more hawkish. You could say that&#8217;s politically motivated or you could take his comments at face value. He probably didn&#8217;t anticipate tariffs and a war when he was more dovish so that&#8217;s what it comes down to in his mind. I think AI is deflationary but he&#8217;s right about the timing being tough and the Fed being overdue to hit its mandate. At the same time, if they overhike and the AI layoffs start, it could be a race to 1% again.<\/p>\n<p dir=\"ltr\">Then there&#8217;s the shot at markets: nothing in the Fed&#8217;s mandate says to keep bonds happy or avoid surprising stocks. That&#8217;s a clear signal that he&#8217;s comfortable delivering a hawkish surprise if the data warrants it. At the moment, the market is pricing in a 64% chance of an October hike.<\/p>\n<p>                            This article was written by Adam Button at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Price of oil could go down relatively quickly, but deeper problem is getting refineries back online The fact we have been 5-1\/2 years above inflation target is playing with fire Need to&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-439045","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439045","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=439045"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439045\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=439045"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=439045"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=439045"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}