President of the Federal Reserve (Fed) Bank of Chicago Austan Goolsbee noted on Thursday that housing inflation remains a key sticking point in price growth, and that the US labor market remains quite strong. Chicago Fed President Goolsbee noted that inflation could fall without a meaningful increase in unemployment.
Key highlights
Issue now is whether the US will face a "traditional" trade off between inflation and unemployment.
Research is "quite clear" across countries and time that political intereference in monetary policy creates worse economic outcomes.
"Extremely important" that the Fed hit its 2% inflation target since it has centered expectations around that number.
The strongest part of the economy right now is the job market.
Overall the US has had a strong post-COVID recovery.
There are industries, parts of the country, and people that are "hurting" in the current economy.
The Fed is not trying to return the price level to where it was; that would require deflation.
Housing inflation is still "well elevated" compared to pre-COVID levels; will be hard to get to 2% unless that changes.
Still optimistic that housing inflation will slow.
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