Federal Reserve Bank of Chicago President Austan Goolsbee called May’s inflation data “very good,” but more months of softer readings will be needed before the central bank can claim victory and potentially start easing monetary policy.
More reports like May’s Consumer Price Index, which came in flat, will help with the Fed’s overall confidence on inflation, Goolsbee said in a fireside chat at the Iowa Farm Bureau Economic Summit in Ankeny, Iowa. If inflation is on a sustainable path to the 2% goal, he added, that will determine whether interest rates can go back to normal over the near-to-medium term.
The Chicago Fed president emphasized that more progress on inflation is needed, noting he will be assessing what will be “a lot of data” before making any decision on a potential rate reduction.
2:55 PM ET: Event ends.
2:35 PM ET: The U.S. dollar (DXY) could see further strength as European countries cut borrowing costs, Goolsbee said. A stronger dollar, though, would impact the export-import balance as well as overall employment and inflation.
2:29 PM ET: Credit delinquencies have been on the upswing, he noted, though not to levels that scream recession.
Update at 2:24 PM ET: Goolsbee said he would be open to having a discussion on changing the Fed’s inflation target, but not until it’s achieved.