Federal Reserve Official Says Fighting Inflation Likely to Be ‘Painful’ – WTOP News
Goolsbee said supply shocks and strong demand may force more rate hikes and push employment below target to restore price stability.
- On Monday, Chicago Fed President Austan Goolsbee warned that fighting inflation will likely be "painful," cautioning the central bank may need to push employment below its 2% target.
- Persistent supply shocks, including higher oil prices from the Iran war and tariff escalations, have left the Fed little choice but to raise borrowing costs to lower demand and restore price stability.
- Fed Chairman Kevin Warsh contradicted Goolsbee last week, stating "I don't believe that we need to do harm to the labor markets to achieve our objective," highlighting internal policy disagreement.
- The Fed lifted its key interest rate to about 3.9% last Wednesday; Goolsbee suggested the bank may need more than one additional hike this year if demand-driven inflation persists.
- While the Fed successfully reduced inflation in 2022-2023 without major unemployment or slowdown, historically such rate hikes have often slowed growth and triggered recessions, leaving experts cautious about the current path.
76 Articles
76 Articles
Fed official warns persistent inflation could require more rate hikes — and economic pain
A top Federal Reserve official says that stubbornly high inflation and the renewal of combat in the Middle East in August were key reasons she supported raising borrowing costs last week, when she also penciled in a second rate hike for later this year
Federal Reserve official says inflation fight will likely be ‘painful’
A top Federal Reserve official said Monday that the central bank may have to cause economic pain in the form of higher unemployment to combat stubbornly high inflation. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said in a speech in London that the Fed is facing a series of persistent supply shocks that have driven up inflation, including higher oil prices from the Iran war and tariffs. Typically, Goolsbee noted, the centr…
A senior Federal Reserve official said Monday that persistently high inflation and the resumption of fighting in the Middle East in August were key reasons for supporting the increase in interest rates...
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