Fed's Goolsbee warns: Returning to 2% inflation target "will not be without pain," employment and wages may pay the price.
Chicago Fed President Austan Goolsbee stated on Monday that supply shocks have become more frequent and persistent in recent years, and the Federal Reserve can no longer simply "look through" them as temporary factors. He warned that if supply-side price pressures continue to spread more broadly, the central bank would still need to tighten policy to curb inflation, but at the cost of job losses, lower wages, and slower economic growth. Goolsbee's remarks create a clear tension with the stance of the new Federal Reserve Chair, Kevin Warsh, who previously stated that achieving inflation targets does not necessarily mean harming the labor market.
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