Chicago Fed Chairman Gullsby stated that slowing inflation in the United States is a trend, not a temporary phenomenon.
Many people say that inflation is declining compared to the past, which is exactly what we want. It cannot be denied that this is a trend, not a fleeting moment in a month. We must be hopeful and closely monitor to ensure that this situation continues
Gullsby has voting rights on the Federal Open Market Committee this year and leans towards the dove side in the Federal Reserve's voting committee.
The latest inflation data shows that the US Consumer Price Index (CPI) rose 3.7% year-on-year in September, slightly exceeding expectations; Excluding volatile factors such as energy and food, the core CPI increased by 4.1% year-on-year. The unexpected increase in costs related to housing and hotel rooms and entertainment services is an important reason for core inflation to remain strong.
The latest employment data shows that the number of non farm workers in the United States increased by 336000 in September, greatly exceeding the market's expected increase of 170000; The unemployment rate remained unchanged from 3.8% in August, slightly higher than the consensus expectation of 3.7%.
These data exacerbate the debate among Federal Reserve officials about whether they need to raise interest rates by another 25 basis points this year. The federal funds rate is currently at a 22-year high of 5.25% to 5.5%, and the Federal Reserve will hold its next interest rate meeting from October 31 to November 1 local time.
Gullsby refuted the claim that the Federal Reserve's process of curbing inflation has stalled, but acknowledged that the rise in rent and other housing inflation is a negative surprise that should be treated with caution.
Gullsby stated that he will closely monitor this to determine the rate at which inflation will decline from now on.
Gullsby is much more optimistic about employment data, stating that while wage growth slows down, monthly employment data shows significant growth, which is likely an indicator of improved labor supply rather than a cause for concern.
Gullsby said, "One of the worst things you can do is to link monetary policy decisions with the latest data from last month, and you need a broader perspective." He emphasized that he has not yet made a decision on the November interest rate meeting.
However, Gullsby pointed out that the Federal Reserve is approaching a consensus that policy debate is shifting from raising interest rates to how high, to how long it needs to maintain interest rates at this level.
External shocks have made the Federal Reserve's next decisions more complex, and the sharp escalation of the Middle East situation has pushed up international oil prices and brought huge uncertainty to global growth and inflation prospects. The widening strike in the US automotive industry and the crisis of the US federal government shutdown pose additional risks.
Gullsby has always insisted that the Federal Reserve can quell inflation without causing significant economic pain, but he also stated that he is most concerned that external interference will endanger the Federal Reserve's goal of achieving an economic soft landing.