Chicago Fed President Goolsby said that US inflation has been consistently above the Fed's 2% target for over five and a half years, and maintaining high inflation levels for a long time is playing with fire. The Fed needs to pay attention to the impact of sustained supply shocks. Gulsby said that the current situation is unpleasant, and if supply shocks have long-term effects, the Federal Reserve needs to reconsider the policy logic of ignoring supply shocks. Gulsby said that before considering a rate cut, the Federal Reserve needs to see more evidence to confirm that inflation is falling and that factors previously considered temporary are subsiding. Gulsby warns that a huge fiscal deficit is a stimulus measure that may lead to economic overheating. Gulsby stated that market expectations for future AI productivity growth may pose a risk of current economic overheating, and the Federal Reserve needs to closely monitor productivity changes. Gulsby pointed out that oil prices may fall rapidly, but the deeper issue lies in the process of resuming operations of refining facilities. Gulsby stated that factors such as energy prices, AI investment, and fiscal stimulus may all affect the future path of inflation.
