Fed Official Warns of Economic Pain in Inflation Fight

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, warned that fighting inflation may require causing economic pain in the form of higher unemployment.

Goolsbee cited persistent supply shocks, including higher oil prices from the Iran war and tariffs, as a major contributor to inflation.

Typically, the central bank would wait for such shocks to fade before raising borrowing costs, but Goolsbee said the Fed now has little choice but to hike rates due to ongoing supply disruptions.

The increases are needed to lower consumer and business demand to a level consistent with reduced supply, which should bring inflation back to the 2% target, according to Goolsbee.