Federal Reserve Bank of Chicago President Austan Goolsbee believes the US central bank may need to treat the current energy shock as a source of persistent inflation rather than expect it to dissipate on its own.
“For big negative supply shocks… you’d be better off just assuming from the beginning this thing is going to be pretty persistent on inflation: that’s certainly what happened in Covid; that’s what happened with the tariffs. That’s maybe what’s happening with oil,” Goolsbee said in a “Economics, Applied” podcast released on Wednesday. “So we better be careful.”
(Reporting by Ann Saphir, Editing by Nick Zieminski)