Asks Goolsbee for his assessment of the latest inflation report (2.4% headline, 2.5% core).
Steve
Austan Goolsbee
The report shows progress on shelter inflation, but services inflation is not tamed and core inflation is running at a 3.6% annual rate. There are both positive and warning signs.
Asks how tariffs are affecting inflation and if the Fed should look through it.
Steve
Austan Goolsbee
Goods prices with higher tariff content show clear inflationary pressure. Hopes this is a one-time, transitory effect the Fed can look through if it doesn't spread to services.
Austan Goolsbee
If tariff inflation is transitory and the path back to 2% is clear, several more rate cuts can happen in 2026. Progress has been stalled around 3%.
Asks Goolsbee for his view on the neutral rate and if policy could be below neutral.
Steve
Austan Goolsbee
Loosely thinks neutral is around 3% (2% inflation + 1% real rate). If inflation runs persistently at 3%, policy becomes looser than intended.
Austan Goolsbee
Needs evidence inflation is headed back to 2% before rates can keep coming down.
Asks if incoming Fed Chair Kevin Warsh will have trouble building consensus for his policies.
Kevin
Austan Goolsbee
Is a longtime fan of Kevin Warsh and thinks he's reputable. Is not aware of colleagues opposing him.
Asks if the Fed can simultaneously slash the balance sheet by a trillion and cut rates by 1 percentage point.
Steve
Austan Goolsbee
Says it sounds complicated and they'll have to look through such proposals as they come.