The October consumer inflation data show that progress continues on bringing inflation down, but price pressures remain well above the Fed’s preferred level, Chicago Federal Reserve President Austan Goolsbee said on Tuesday.
“We still have a long way to go before we reach our 2% PCE inflation target,” Goolsbee said in a moderated discussion at the Detroit Economic Club. The personal consumption expenditures price index, or PCE, is the Fed’s preferred measure of inflation.
“There are always some bumps in the road when inflation comes down,” he added.
Headline inflation was flat in October, led by a drop in gasoline prices. It was the smallest gain in 15 months. Stocks
rose sharply and bond yields
dropped after the data were released.
Read: U.S. prices not rising as fast
Goolsbee said that 2023 has been a good year for the Fed and that he hoped the trend would continue.
This year might see the single largest drop in inflation in a peacetime economy in 100 years, he said, adding that the key to further progress over the next few months will be what happens to housing inflation.
There could be “the softest of all soft landings,” he said of the U.S. economy.
This process has been aided by strong supply-side developments and strong productivity growth, he said.