Goolsbee says Fed projections may not suffice if inflation is demand driven
The remark follows the Federal Reserve's first rate hike since 2023 and comes as officials split over how to read above-3% inflation.
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Goolsbee said the Fed's own projections will not be enough to contain inflation if the pressure driving it turns out to be demand rather than supply. He did not say which he believes is happening now.
The comment follows the Federal Reserve's first rate hike since 2023. Kansas City Fed president Schmid backed that move, saying it was justified even with inflation running above 3%, and argued the labor market still looks balanced despite that. Goolsbee has separately said a further rate hike would not undo the rate cuts made in 2025.
Markets are also weighing a jump in energy costs after Saudi Aramco halted crude sales to Europe, with diesel prices reaching $6.45 a gallon.
Goolsbee's caveat marks a shift from the more hawkish tone Fed governor Warsh struck after the hike, and it points to a risk markets have largely priced out: if the current round of inflation turns out to be demand driven rather than a supply problem, the Fed may need to tighten further than the one additional hike investors currently expect this year.