Gulsby: Productivity expectations may trigger inflation and require interest rate hikes

According to Federal Reserve Bank of Chicago President Goolsby's statement on May 28th, the market expects that future productivity increases may drive investment and spending, leading to inflation and requiring the Federal Reserve to raise interest rates. He said at the Bank of Japan meeting in Tokyo that expected income growth could cause the economy to overheat before productivity booms, and interest rates could rise as a result. He also mentioned that supply shocks may exacerbate inflation caused by expectations of productivity growth.