Surprising Improvement in April's Inflation Rate, Regardless of Swaying Tariff Rate Fluctuations
Rewritten Article
Host A MARTÍNEZ chats with Austan Goolsbee, president of the Federal Reserve Bank of Chicago, about the rollercoaster ride that April was for the U.S. economy. Goolsbee discusses the ups and downs of tariffs, the volatile stock market, and recent inflation reports. He explains that the official data on inflation comes out with a lag, so it takes time for uncertainty to show up in the numbers. Goolsbee uses the analogy of data dogs to describe his approach - focusing on the difference between the time for walking and the time for sniffing, and trying to get past the noise to find the throughline.
When asked if it's fair to say that the engine of the U.S. economy is still running smoothly despite the outer appearance, Goolsbee laughs and says it's a good analogy - maybe. However, it's important to remember that the Fed's role is to be the steady hand, not reacting to daily gyrations in the stock market or policy pronouncements. Instead, they're focused on getting the numbers that suggest the economy is going okay.
When it comes to the Core Consumer Price Index, which excludes food and energy, Goolsbee pays a lot of attention. He notes that you'll hear people talking about a "super core" excluding pieces of inflation that are most affected by tariffs, but he points out that they pay a lot of attention to core inflation.
Goolsbee also discusses the need to get out and listen to people in real time, what they're seeing, especially during moments of transition. He warns against making too much of any one month or even two months' numbers since people need consistency to act.
In enrichment data, we learn about the various strategies the Federal Reserve uses to make effective monetary policy decisions. These include monitoring economic indicators, using open market operations, setting interest rates, providing forward guidance, and being prepared to adjust policy in response to emerging risks or changes in economic conditions. The Fed also strives to implement robust monetary policies that are clear, predictable, and less susceptible to political pressures.
- Austan Goolsbee emphasizes the importance of paying attention to core inflation (excluding food and energy) and the "super core" that excludes inflation influenced by tariffs, as these figures provide valuable insights into the economy's stability.
- In the pursuit of effective monetary policy decisions, the Federal Reserve engages in various strategies, such as monitoring economic indicators, employing open market operations, setting interest rates, providing forward guidance, and being ready to adjust policy in response to emerging risks or changes in economic conditions. This approach aims to implement robust, non-political, and predictable policies.
