Inflation continues to go 'the wrong way,' Chicago Fed's Goolsbee says

What happened

Chicago Fed President Austan Goolsbee said inflation has looked worse for three to four months, especially in services, where tariffs usually have little effect. He also cited rising construction costs and said policymakers are assessing whether inflation reflects temporary supply problems or overheating linked to AI investment.

Confirmed

Global impact / market context

If inflation stays elevated because demand is running too hot, the Fed may keep interest rates higher or raise them further. Borrowing costs could then rise for businesses and households, potentially slowing construction and AI-related investment and increasing financing costs for companies.

Analyst inference

The article says October consumer inflation was hotter than the expected 0.3% monthly increase, while the year-over-year figure was unavailable because last year's shutdown left no comparable data point. A Cleveland Fed model estimated annual PCE inflation at 3.8%, above the Fed's 2% target.

Confirmed

What to watch

1. Watch for later inflation readings, especially services and construction costs, to show whether price pressure is persisting or easing; the article says these categories concern Goolsbee. Analyst inference
2. Watch whether Fed policymakers conclude that temporary supply disruptions or overheating are driving inflation, since Goolsbee said they are still weighing those causes. Confirmed
3. Watch the Fed's December meeting decision: the article reports market-implied odds of a 25-basis-point increase at 91.7% and a 50-basis-point increase at 8.3%. Confirmed

Evidence

• seekingalpha.com