Goldman Economist: Inflation Is Broadening
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Kevin Warsh, new Fed Chair, testified before Congress last week that preventing individual price spikes from "broadening out" is one of his primary responsibilities
- Warsh framed the risk against a backdrop of many individual price spikes in recent years, making anti-broadening vigilance the rationale for his policy posture
- A Goldman Sachs economist countered that the "bad news" is that on the whole those price spikes are broadening into broader inflation
- The Goldman diagnosis puts the new Chair's stated number-one mandate — keeping spikes localized — directly at odds with the current trend he must counter
Why it matters: If the Goldman's read is right, Warsh's headline mandate is already failing on his watch: inflation broadening from isolated categories into the whole index is the exact condition he told Congress he is charged with preventing, raising the stakes for his early-tenure policy choices and any forthcoming framing of the inflation outlook.
