Chicago Fed President Austan Goolsbee said that the US-Iran conflict is looking more like an inflationary shock. He added that “It has not yet been a stagflationary-direction shock,” with a blow to both the job market and inflation that would force the US central bank to decide which of its goals is more at risk, Goolsbee said on a video call with journalists after participating in a Milken Institute conference in Los Angeles.
OVERHAULING THE CENTRAL BANK’S INFLATION FRAMEWORK IS ‘NOT AN EASY SPACE’
KEVIN WARSH HAS SOME FRESH IDEAS WORTH THINKING ABOUT
US CENTRAL BANK SHOULD INCORPORATE ALL THE DATA IT CAN, BUT SAYS HE DOESN’T THINK THERE IS A SILVER BULLET FOR INFLATION PROBLEM
HE IS OPEN TO NEW WAYS OF THINKING ABOUT INFLATION
HE WOULD BE ON THE LOOKOUT FOR ‘UNDERHEATING’ DEMAND IF LOW CONSUMER CONFIDENCE TRANSLATES INTO FALLING CONSUMER SPENDING
US MIGHT BE APPROACHING AN ERA OF LABOR SCARCITY DUE TO COMBINATION OF POPULATION AGING AND LIMITED IMMIGRATION
THE LONGER OIL PRICES REMAIN HIGH, THE GREATER THE CHANCE PEOPLE START FACTORING HIGHER INFLATION INTO EXPECTATIONS, WHICH WOULD BE ‘EXTREMELY PROBLEMATIC’ FOR THE CENTRAL BANK
LABOR MARKET IS STABLE BUT NOT GREAT; GAINS IN PAYROLLS ARE NOT GOOD MEASURE OF SLACK AT THIS POINT
IT IS CLEAR FROM PUBLIC STATEMENTS THAT THERE ARE DIFFERENT WORLD VIEWS AT THE US CENTRAL BANK ABOUT PATH OF INFLATION, NATURE OF JOB MARKET
EVIDENCE OF MORE PERSISTENT INFLATION MIGHT COME FROM SUSTAINED PRICE INCREASES IN CORE SERVICES, WEALTH-DRIVEN SPENDING AMONG MORE AFFLUENT HOUSEHOLDS, AND WAGE HIKES IN OCCUPATIONS TIED TO ARTIFICIAL INTELLIGENCE INVESTMENT
NOT SURPRISED TO SEE EVIDENCE OF SUPPLY CHAIN PROBLEMS DEVELOPING GIVEN LENGTH OF US-IRAN CONFLICT
EVERY POLICY OPTION IS ALWAYS ON THE TABLE, AND THE WORLD SHOULD KNOW THAT
ANYTHING THAT INDICATED THE US IS GOING THE WRONG WAY ON INFLATION ON A PERSISTENT BASIS WOULD REQUIRE A RETHINK ABOUT THE RIGHT MONETARY POLICY PATH
US PRODUCTIVITY GAINS HAVE PROVED SOMEWHAT DURABLE, BUT IMPLICATION FOR INTEREST RATES IS MORE SUBTLE
LABOR MARKET SEEMS PRETTY STABLE WHILE INFLATION HAS BEEN OVER CENTRAL BANK’S TARGET FOR FIVE YEARS AND PROGRESS ON THAT FRONT HAS STOPPED
US CENTRAL BANK NEEDS TO WATCH FOR BEHAVIORS TODAY THAT SEEM PREMISED ON A ‘BOUNTY’ TO COME, SUCH AS SPENDING OUT OF WEALTH EFFECTS OR OVERHEATING LOCAL MARKETS BASED ON DATA-CENTER INVESTMENT
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