Chicago Federal Reserve President Austan Goolsbee warned that the path back to the central bank's 2% inflation target is fraught with difficulty. He pointed to persistent supply shocks. Energy volatility and tariffs drive these disruptions. They occur against a backdrop of robust economic demand.
Goolsbee stressed that policymakers must account for the long-term effects of these supply-side issues on price levels. He distinguished these supply-driven pressures from demand-driven ones, noting they require different evaluations. Despite this complexity, he affirmed the Federal Reserve's readiness to act if demand overheats the economy. Without clear signs that supply-driven inflation is fading, Goolsbee concluded that achieving price stability remains a potentially painful endeavor.