Fed’s Goolsbee: One single inflation reading shouldn’t ignite to much worries

Chicago Fed President Austan Goolsbee has reassured investors that the central bank will be able to lower interest rates in 2024 despite a hotter-than-expected reading on consumer prices.

The Consumer Price Index (CPI) exceeded expectations in January, rising 3.1% over the previous year and 0.3% over the previous month.

Prices increased 0.4% in January and 3.9% over the previous year on a “core” basis, which eliminates the more erratic costs of groceries and petrol.

Investors sold off stocks after the release of the CPI data, fearing it would jeopardize the Fed’s capacity to lower interest rates until at least summer.

Goolsbee clarified that the inflation rate is still rising in the right direction and that the Fed’s 2% target is linked to the personal consumption expenditures index rather than the CPI. He is closely monitoring housing prices to ensure the Fed can get inflation back down to 2%.