Goolsbee Says Fed Has 'Work to Do' as Inflation Slides Further From Target

Chicago Fed President Austan Goolsbee didn't mince words Friday after another hot inflation print, telling CNBC the central bank has to act. The Fed, he said on 'Squawk Box,' 'has definitely got work to do to continue to reestablish its credibility.' His comments landed minutes after the Bureau of Labor Statistics reported the producer price index climbed 0.3% in October — a touch below expectations, but up 6.5% over the year, the fastest annual pace since November 2022.

That reading followed consumer price data earlier in the week that also came in hotter than expected, and Goolsbee said the Fed is drifting away from its 2% goal. 'We've been above 2% for almost six years, and while it sometimes we were making progress, lately we're not making any progress, and if anything, it's going the wrong way,' he said. He blamed a mix of stubborn supply shocks and a newer culprit: demand overheating from the AI data center buildout, which he said 'looks like it's starting to spread out of its lane.'

Traders are bracing for a move at the Dec. 8-9 meeting of the Federal Open Market Committee. Markets are fully pricing in a quarter-point increase, and CME Group's FedWatch gauge puts the odds of a half-point hike at better than 10%. Goolsbee isn't voting on the FOMC right now, but he will be in 2027. Fed Governor Christopher Waller said earlier in the week he would consider a 50 basis point move depending on this week's inflation numbers.

Goolsbee stopped short of calling for a bigger hike, keeping the focus on the data. 'What is happening to inflation, and are we on path back to 2%?' he said. 'My feeling is, right now we're not.'