Fed Official Warns Inflation Fight Will Be Painful

A top Federal Reserve official, Austan Goolsbee, warned that fighting inflation will be painful and may require higher unemployment. Speaking in London, Goolsbee said that supply disruptions, including tariffs and rising oil prices, have pushed inflation higher.

Goolsbee noted that the Fed typically waits for temporary shocks to clear naturally instead of raising interest rates. However, with repeated supply shocks, the Fed has little option left except to raise rates to cool business and consumer demand, ultimately bringing inflation back to its 2% target.

Goolsbee emphasized that 'the only way to bring inflation down is to raise rates and narrow the gap between supply and demand.' This approach would necessarily cause some economic pain, he said. 'It's going to be painful,' Goolsbee told reporters later.