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(Bloomberg) — Federal Reserve Bank of Chicago President Austan Goolsbee said a lack of inflation data during the government shutdown makes him more uneasy about continuing interest-rate cuts.
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“If there are problems developing on the inflation side, it’s going to be a fair amount of time before we see that,” Goolsbee said Thursday on CNBC. “That makes me even more uneasy.”
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The Chicago Fed chief noted there aren’t as many private-sector data sources for inflation as there are for the labor market, so policymakers don’t have as clear a view into what’s going on with prices during the ongoing shutdown as they do with hiring.
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“I have some concerns, and I lean more to the, ‘When it’s foggy, let’s just be a little careful and slow down,’” he said.
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Policymakers last month lowered interest rates for a second straight meeting in an effort to bolster the labor market following a sharp slowdown in hiring over the summer. But inflation, which at 3% in September remained well above the Fed’s 2% target, has also raised concerns among some officials that it will take longer to come down than they thought.
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Goolsbee said a tick up in core services inflation worried him because it shows price pressures persist even outside of categories directly impacted by tariffs, and because it tends to be a more persistent form of inflation.
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Service prices, not counting energy-related ones, rose 3.5% in the year through September. A real-time indicator of unemployment published Thursday by the Chicago Fed, based on private-sector data sources, suggested the jobless rate stood at 4.36% in October, nearly unchanged from 4.35% in August.
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(Updates with more Goolsbee comments beginning in third paragraph.)
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