Chicago Federal Reserve President Austan Goolsbee didn't mince words Thursday: inflation is still too damn high. In a live CNBC interview from his home district, Goolsbee declined to speculate on where rates are headed. That's not a sign of caution — it's a confession. When a sitting Fed president refuses to even hint at a rate path, you know they're flying blind.
The Two Faces of the Fed
Meanwhile, across the country, New York Fed President John Williams struck a different chord. He sees price pressures easing. Two Fed officials, two realities. One sees a fire that won't quit. The other watches embers cool. Who's right? Depends on which data you're paid to believe.
"Inflation is too high. Period. I'm not going to play the guessing game on rates." — Austan Goolsbee
Goolsbee's bluntness is refreshing in a world of central bankers who speak in riddles. But it's also terrifying. If the guy with a vote on rates can't see the landing strip, how are the rest of us supposed to plan? The Fed's "data-dependent" mantra has become a crutch — an excuse to kick the can down the road while the rest of us get crushed.
What 'Too High' Really Means
Goolsbee's inflation gauge isn't the headline CPI you see on TV. It's the core PCE — the Fed's preferred measure. In April, that number sat at 4.7%. Double the target. And services inflation, the sticky kind driven by rent and healthcare, is still running hot at 5.3%. That's not a blip. That's a structural shift.
Williams, ever the optimist, points to supply chain healing and falling goods prices. Sure, used car prices are down 11% from peak. But try telling that to someone whose rent just jumped 8%. The Fed's favorite inflation cocktail — core services ex-housing — is still rising at a 4.2% annualized clip. That's the part that keeps Goolsbee up at night.
The Rate Path That Never Comes
Markets are pricing in a cut by September. They've been wrong before. Goolsbee's refusal to engage on rate speculation is a cold shower for those hoping for relief. The Fed has a history of overpromising and underdelivering on cuts. Remember 2024? They penciled in three cuts. We got one. And that one was more about saving face than saving the economy.
Williams sees a different path. He's focused on the so-called "lagged effects" of the 525 basis points of tightening already delivered. Maybe he's right. Maybe the economy is like a supertanker — takes miles to turn. But the supertanker analogy works both ways: once inflation steers off course, it takes forever to get back on track.
Real People, Real Pain
This isn't about abstract models. It's about the family in Columbus whose grocery bill jumped 12% in two years. The small business owner in Phoenix paying 9% more for commercial insurance. The retiree in Tampa watching her fixed income buy less every month. Inflation isn't a statistic — it's a thief.
When Goolsbee says inflation is "too high," he's not talking about a number on a spreadsheet. He's talking about the erosion of purchasing power that hits the working class hardest. The wealthy hedge with real estate and stocks. Everyone else just takes the hit.
What Comes Next
The Fed's next meeting is July 29-30. The odds of a hold? Near certain. The odds of a cut? Virtually zero. But Goolsbee's comments suggest something deeper: a loss of confidence in the Fed's own forecast. If the inflation hawk from Chicago can't see the path, maybe there is no path. Maybe we're stuck in a new regime where 3% inflation is the new normal.
"We need to see sustained evidence that inflation is moving sustainably toward 2%. Not one month. Not two. Sustained." — Austan Goolsbee, earlier this year
That quote from February still holds. The data since then has been a mixed bag — some months down, some months up. The moving average is flat. That's not "sustained progress." That's treadmilling.
The Verdict
Goolsbee is the realist. Williams is the optimist. The market wants to believe Williams. It always does. But Goolsbee's refusal to play the rate-guessing game is the most honest thing we've heard from the Fed all year. Inflation is too high. Full stop. And until someone in power acknowledges that the fight is far from over, don't bet on rate cuts.
In the meantime, keep your wallet tight and your expectations lower. The Fed's compass is broken, and Goolsbee just told us he's not sure where true north is anymore.
