Fed Officials Say They’re Confident Inflation Will Fall To 2% … Eventually

In separate speeches Wednesday, members of the Federal Open Market Committee predicted inflation would fall to the central bank’s goal of a 2% annual rate—although possibly not for some time.

FOMC voting members Austan Goolsbee, president of the Chicago Fed and John Williams of the New York Fed, as well as non-voter Thomas Barkin of the Richmond Fed, said various economic data suggested inflation is cooling down, albeit gradually.

The Fed members made their comments hours after the Bureau of Labor Statistics released an official report on consumer prices in December, which showed inflation accelerated that month. However, “core” inflation, which excludes volatile prices for food and energy, fell for the first time in four months, giving officials more hope that price increases are slowing.

“I’m pretty confident that we will get it to 2%,” Goolsbee said in an online Q&A event.

Since September, the Fed has cut its key rate from a two-decade high to stimulate the economy and prevent a recent slowdown in the labor market from turning into mass job losses. But the latest data has shown inflation staying stubborn and the job market humming along, so financial markets expect the Fed to hold off on more rate cuts for the time being.

Barkin confirmed that view in remarks to reporters after an event Wednesday, according to Bloomberg. He said interest rates should stay in “restrictive” territory for the time being, meaning that they should stay high enough to drag on the economy and inflation.

Williams noted that today’s inflation in the 2-3% range is far tamer than in 2022 when the CPI reached 9.1%, its highest level since 1981.

“That’s a dramatic fall, and the process of disinflation remains in train,” he said at an economic summit in Connecticut in prepared remarks. “But we are still not at our 2% goal, and it will take more time until we can achieve that on a sustained basis.”