Chicago Fed’s Goolsbee warns government shutdown leaves central bank “half-blind” on inflation, shifting focus from jobs to price risks amid missing data.

Chicago Federal Reserve President Austan Goolsbee warned that the ongoing U.S. federal government shutdown is impairing the Federal Reserve’s ability to monitor inflation, leaving policymakers “half-blind” on one of their two core mandates and shifting his risk focus from jobs to prices. In an interview with Semafor, Goolsbee said that while the Fed and the Chicago Fed can still track labor market conditions using private payroll data (such as ADP) and proprietary labor indicators, there are far fewer reliable alternative sources for timely, comprehensive consumer price data during a shutdown, especially for services inflation. He described the situation as having “one eye covered,” stressing that the lack of official inflation readings makes him more cautious about supporting further interest rate cuts until clearer data confirm that the recent rise in inflation is temporary. Goolsbee’s comments come after several months in which core inflation and particularly core services inflation had moved above the Fed’s 2% target, with recent three‑month annualized readings around the mid‑3% to near 4% range before official data releases were halted by the shutdown. He noted that tariffs alone cannot explain persistent services inflation and warned that firms that had previously absorbed tariff costs may reach a point where they must raise prices, adding to inflation pressures. While he still characterizes the U.S. economy as “basically strong and stable” and believes policy rates can ultimately be lowered, he emphasized the danger of “front‑loading” rate cuts when the Fed cannot see in real time whether inflation is re‑accelerating. For markets and policymakers, his stance underscores that the shutdown’s primary macroeconomic risk, in his view, is not immediate labor market deterioration but the possibility of unnoticed inflation drift if policy is eased too aggressively without full data.

✨ AI-generated background, compiled from web sources — not editorial content.

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