{
  "type": "article",
  "title": "Prices are still drifting the wrong way, and a Fed policymaker says that is the real worry",
  "summary": "Goolsbee says inflation is moving in the wrong direction, with core and services prices still too high, making the inflation side of the Fed's mandate the central concern, even as he warns AI-fueled spending could risk overheating.",
  "content": "The direction of inflation has become the Federal Reserve's biggest headache, and Goolsbee left little doubt about it. Prices, he said, are \"going the wrong way,\" and the harder question right now is figuring out how much of that pressure is fleeting and how much is here to stay.\n\nServices inflation is the bigger worry\nPart of the recent jump could come down to one-off factors that fade on their own. But the stickier, more troubling piece is services inflation, which Goolsbee described as \"a little more disturbing.\" It is the kind of pressure that does not wash out quickly, which makes it harder to brush aside.\n\nThe latest PCE report, he said, \"wasn't all negative.\" There were signs of some improvement on the services side. Even so, inflation is sitting well above the level the Fed wants, and the report did little to change that picture.\n\nCore inflation \"well too high\"\nCore inflation, which strips out the volatile items, remains \"well too high\" and is drifting in the wrong direction. For Goolsbee, that is enough to keep the inflation half of the Fed's mandate as the central problem facing policymakers right now.\n\nDoubts about forward guidance\nGoolsbee said he has never been fully comfortable with forward guidance and has no appetite for locking himself into forecasts that stretch years into the future. He does not, however, have a problem with the dot plot itself.\n\nHe backed the Fed Chair's task force that is weighing options around the dot plot, and he praised the push to make the Fed's policy statement cleaner and easier to read.\n\nA warning on the AI boom\nTurning to artificial intelligence, Goolsbee flagged a specific risk. If financial markets start pricing in productivity gains that have not arrived yet, and consumers begin spending today on the assumption those gains are coming, the economy could overheat.\n\nSpending now against profits that exist only on paper is what makes him uneasy, because it could feed fresh inflationary pressure before the payoff ever materializes.\n\nWhy wages won't give early warning\nHe also cautioned against leaning on wages as an early signal. Pay, in his view, is not a reliable leading indicator for inflation, and prices could well start climbing before wages catch up.\n\nWhat this means for you\n• For borrowers and savers: A senior Fed voice calling core inflation \"well too high\" signals the central bank is in no rush to cut interest rates, so loan EMIs and deposit rates are likely to stay elevated.\n• For investors: Persistent inflation worries can keep markets jittery and cap hopes of cheaper money, so bets tied to early rate cuts carry more risk.\n\nQuestions & Answers\n\n1. What did Goolsbee say about the direction of inflation?\nHe said prices are \"going the wrong way\" and that it is hard to tell how much of the pressure is temporary versus persistent.\n\n2. Why is services inflation a bigger worry?\nBecause it does not fade quickly, and Goolsbee called it \"a little more disturbing.\"\n\n3. What did the latest PCE report show?\nIt \"wasn't all negative\" and showed some improvement in services, but inflation stayed well above where the Fed wants it.\n\n4. What is the Fed's main problem according to Goolsbee?\nThe inflation side of its mandate, because core inflation remains \"well too high\" and is trending the wrong way.\n\n5. What is his stance on the dot plot and forward guidance?\nHe is uneasy with forward guidance but does not dislike the dot plot, and he backed the task force reviewing options around it.\n\n6. What AI-related risk did he flag?\nIf markets and consumers spend today based on productivity gains that have not arrived, the economy could overheat and fuel inflation.\n\n7. Are wages a good signal for inflation?\nNo, he said wages are not a great leading indicator and that inflation could rise before wages move higher.",
  "url": "https://trendkia.com/en/market/kora-mahngai-aba-bhi-bahuta-unchi-fed-adhikari-ne-mana-sabase-bari-chinta-yahi-hai-3046",
  "category": "Market",
  "publishedAt": "2026-06-25",
  "tags": [
    "Fed inflation",
    "Goolsbee",
    "core inflation",
    "PCE report",
    "interest rates",
    "Federal Reserve",
    "AI overheating",
    "services inflation"
  ],
  "language": "en",
  "site": "TrendKia"
}