Chicago Fed Pres. Goolsbee is speaking and says:

• We have an inflation problem in this country
• CPI data was worse than expected
• Worst part of inflation is the services inflation.

Since March 2021, US CPI inflation has remained well above the Fed’s 2% target, reaching a peak of 9.1% before easing to a low near 2.3%. Even with inflation cooling from the extremes, the cumulative effect over that multi-year period has been significant, leaving consumers and businesses facing a much higher overall price level. Inflation has a way of feeding on itself over time, even as Fed officials continue to argue that longer-term inflation expectations remain anchored.

Looking ahead, markets will be closely watching how the Fed — presumably under the direction of Kevin Warsh (he should be confirmed as early as tomorrow) — responds to the latest inflation pressures. While the recent surge in oil prices could prove temporary, energy costs often seep into a broader range of industrial and consumer goods, creating second-round inflation effects. That risk becomes more concerning with Austan Goolsbee already warning that service-sector inflation remains too high. Adding renewed goods inflation to persistent service inflation would complicate the Fed’s path and create a less favorable inflation backdrop for policymakers and markets alike.

PS Copper prices are approaching the high price reached in January near $6.58. The current price is trading at $6.48.