Chicago Fed's Goolsbee says central bank 'has definitely got work to do' on inflation

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The policymaker expressed concern about the latest inflation data, telling CNBC that the central bank likely will need to take action.

Chicago Federal Reserve President Austan Goolsbee expressed concern about the latest inflation data, telling CNBC on Friday that the central bank likely will need to take action.

"I believe that the the central bank has definitely got work to do to continue to reestablish its credibility," the policymaker said during an interview on "Squawk Box."

His remarks came shortly after the Bureau of Labor Statistics reported that the producer price index, considered a proxy for wholesale prices, posted a 0.3% increase in October, which was slightly less than expected, but also indicated a 6.5% annual gain, the highest since November 2022.

With data in hand earlier in the week showing that the consumer price index rose a bit more than expected during the month, Goolsbee said the Fed is slipping further away from its 2% inflation target.

"We've been above 2% for almost six years, and while it sometimes we were making progress, lately we're not making any progress, and if anything, it's going the wrong way," he said.

"Inflation is rising. It's proved far more persistent than we predicted at the beginning from the supply shocks, and now we're adding this old-fashioned demand overheating coming from the AI data center buildout, that looks like it's starting to spread out of its lane," Goolsbee added.

Markets are fully pricing in a quarter percentage point increase when the rate-setting Federal Open Market Committee meets next on Dec. 8-9. There also is a better than 10% probability of a half-point hike, according to the CME Group's FedWatch gauge of futures markets. Goolsbee is not currently an FOMC voter but will be in 2027.

Earlier in the week, Fed Governor Christopher Waller indicated he would entertain a 50 basis point move depending on this week's inflation data.

Goolsbee did not speculate directly on whether the Fed might need to be more aggressive.

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