Fed Official Warns Inflation Battle May Bring Economic Pain

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, warned that fighting inflation may be 'painful' for the economy. Speaking in London, he said that the Fed is facing a series of persistent supply shocks that have driven up inflation, including higher oil prices from the Iran war and tariffs.

Goolsbee explained that typically, the central bank would wait for such shocks to fade and inflation to fall on its own rather than raise borrowing costs. However, in this case, the Fed may need to cause economic pain in the form of higher unemployment to combat stubbornly high inflation.