On November 13, Chicago Fed President Austan Goolsbee said that U.S. inflation pressures have spread from energy and tariff-related areas into broader sectors of the economy, and that strong demand from artificial intelligence infrastructure construction is pushing prices even higher.
He believes U.S. inflation has not yet moved onto a path back toward the Fed's 2% target, and the central bank still needs to act to prevent overheating demand from causing inflation to keep rising.
Goolsbee pointed out that inflation is no longer merely a temporary problem caused by rising energy prices or supply shocks. As AI data center construction drives up demand for related goods and services, price pressures are becoming more persistent than previously expected. At the same time, services inflation and rising healthcare costs are also unlikely to ease noticeably in the short term.
He stressed that wage growth is a lagging indicator reflecting changes in inflation, so it cannot be used alone to judge current price pressures.
Regarding future monetary policy, Goolsbee said the Fed must preserve its credibility in controlling inflation, and if economic demand remains overheated, it cannot ignore inflation risks. Upcoming inflation data will determine whether the Fed needs to accelerate the pace of rate hikes.
In addition, Goolsbee warned that even if international oil prices fall quickly, U.S. refining capacity remains constrained, which could keep diesel and jet fuel prices elevated and thereby prolong the impact of energy costs on inflation.
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