Fed's Goolsbee says the central bank has 'work to do' to restore its credibility on inflation

The Federal Reserve "has definitely got work to do to continue to reestablish its credibility" on inflation, Chicago Fed President Austan Goolsbee said on Friday, November 13, in an interview with CNBC. Inflation has been above the Fed's 2% goal "for almost six years," and lately "it's going the wrong way," he said, according to CNBC's report of the interview.

What Goolsbee said

Speaking on CNBC's "Squawk Box," Goolsbee said the Fed had made progress at times but was no longer doing so. "Inflation is rising," he said, adding that it had proved "far more persistent than we predicted" after the earlier supply shocks.

He described an added source of pressure: "old-fashioned demand overheating coming from the AI data center buildout," which he said "looks like it's starting to spread out of its lane."

Looking ahead, he said the question is whether inflation is on its way back to 2%. "My feeling is, right now we're not," he said. CNBC reported that he did not speculate directly on whether the Fed may need to move more aggressively.

Where the Fed stands

The Fed held its target range at 3.75% to 4% at its October meeting, with two officials voting for a hike. Since then, the consumer price index for October, published on November 10, showed that prices rose 0.4% in the month.

Other officials have spoken this week. Governor Christopher Waller said on November 10 that he leans toward a December rate hike and that a half-point increase should be considered if core inflation came in around 0.3% or higher, which it did. Vice Chair for Supervision Michelle Bowman said the same day that there is still work to do on inflation but that more tightening has to be weighed against its costs.

The next meeting of the Federal Open Market Committee (FOMC), which sets rates, is on December 8–9 and will include new economic projections. Goolsbee is an alternate member of the committee in 2026, so he will take part in the discussion without a vote. Under the Fed's rotation of voting seats, the Chicago Fed president votes in 2027.

What it could mean for traders

In our reading, Goolsbee's comments add a nonvoting member of the committee to the officials who say inflation is moving away from the Fed's goal. With a quarter-point increase fully priced for December, according to the CME FedWatch data cited by CNBC, the open questions for rate-sensitive markets, including bonds, the dollar and crypto, are whether the Fed raises rates at the December 8–9 meeting, by how much, and what path for rates the new projections show. The pricing reflects market expectations, not a forecast of ours.