Comments from the Chicago Fed President:
- Inflation side of the mandate is clearly the problem
- PCE report wasn’t all negative
- Saw a little bit of improvement on services in PCE report
- Need to keep watching inflation
- Inflation is a bit more disturbing on the services side
- Some inflation is driven by one-and-done
- I’ve long been uneasy with forward guidance but I don’t hate the dot plot
- I don’t want to commit on years-ahead forecasts
- Spending now and counting on future gains makes me nervous about potential inflationary pressure
- Wages aren’t a great leading indicator for inflation
- It’s core CPI from services that makes me nervous
It’s going to be interesting if Warsh pulls back from communication. The signal on rates in that case is likely to be driven by other Fed members, including Goolsbee. That’s going to make it more important to follow the bents of individual members. Goolsbee has been a hawk for awhile and he’s not giving that up today despite the drop in oil prices. At the same time, it doesn’t sound like he’s frothing at the mouth to hike rates at the next meeting.
This article was written by Adam Button at investinglive.com.
