Fed may need to front-load aggressive hikes if inflation is demand-driven, says Goolsbee
Chicago Fed President Austan Goolsbee warned that if inflation is driven by overheating demand—from services and the AI boom—the Fed may require a more aggressive, front-loaded policy response, and a single 25 basis-point hike could be insufficient if inflation is not just a supply shock. He highlighted persistent demand pressures (and AI-related spending) as a risk that could push output beyond what the economy can absorb, even as oil-price shocks from Iran influence prices. The Fed recently raised rates with another hike expected later this year, and projections show rates held in 2027; the path depends on whether inflation is demand-driven or supply-shock driven.
