FED Official Austan Goolsbee: “Inflation Is Making a Comeback”

Federal Reserve official Austan Goolsbee warned that rising oil prices could pose serious risks to the global economy. Goolsbee stated that the worst-case scenario could be a recession triggered by stagflation, driven by rising energy costs.

“Hopefully It Won’t Be Permanent”

According to Goolsbee, markets are concerned that inflation could rise again, and a surge in oil prices to $5 per gallon could put pressure on supply chains. The FDE official noted that this could slow economic activity, but expressed hope that the increase in energy prices would be temporary.

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However, Goolsbee warned that if high inflation persists for an extended period, it could become permanently entrenched in the economy. Describing the current situation as “complex,” Goolsbee said the Fed lacks a clear roadmap to guide its policy-making.

Goolsbee stated that the labor market was generally stable but growth remained weak, adding that rising oil prices could create a stagflationary shock and lead to a resurgence of inflation.

On the other hand, Goolsbee stated that questioning the independence of the Fed would be a “bad idea,” arguing that the current legal framework does not contain any obligation to guarantee the satisfaction of either the stock market or political authorities.

*This is not investment advice.

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