Fed Official Warns Inflation Fight May Bring Economic Pain

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said that fighting inflation may be 'painful' for the US economy. Speaking in London on Monday, Goolsbee stated that the central bank is facing a series of persistent supply shocks that have driven up inflation.

The Fed official noted that these supply shocks include higher oil prices from the Iran war and tariffs. Typically, the central bank would wait for such shocks to fade and inflation to fall on its own rather than raise borrowing costs.

Goolsbee emphasized that fighting inflation may require causing economic pain in the form of higher unemployment to combat stubbornly high inflation. The Fed is currently grappling with a challenging situation as it tries to balance the need to control inflation with the risk of causing recession.