Fed's Goolsbee Warns Services Inflation Is Kicking Up Ahead of October CPI Report

Chicago Fed President Austan Goolsbee delivered a stark assessment Monday morning, saying services inflation is beginning to kick up and calling inflation the Fed's big problem. He went further, stating that the Fed must come to terms with its failure on inflation, and flagged that the rapid buildup of data centers is starting to look like old-fashioned overheating, a space he said the Fed needs to watch closely. On the labor side, Goolsbee said employment and growth remain pretty stable, though he qualified that the jobs situation is stable without being good. He also noted that supply shocks make both sides of the Fed's dual mandate harder to manage simultaneously.

The remarks land at a sensitive moment for markets. A blockbuster jobs report had already raised expectations for another Fed rate hike, and investors are now focused on Tuesday's October CPI release, where economists forecast headline inflation running at 3.7% year over year, with airfare expected to push the number higher. AI and chip stocks, including Nvidia, remain under pressure after last week's selloff, though some buyers returned Monday. Oil fell nearly 4% and Treasury yields eased in early trading, as markets weigh the inflation outlook against hopes for Fed restraint.

The week carries a heavy slate beyond inflation data. October Producer Prices are due Friday, bond markets are closed Wednesday for Veterans Day, and earnings from Cisco, Take-Two Interactive, and CoreWeave are among the highlights. Multiple Fed speakers are scheduled across the week, including Waller, Logan, Schmid, and Bowman on Tuesday alongside the CPI print.