Federal Reserve Bank of Chicago President Austan Goolsbee warned that a lack of progress in the services sector has left the U.S. with a “genuine inflation challenge” that must be addressed to reach the central bank’s target. In an appearance on PBS NewsHour, Goolsbee characterized the October consumer price index report as “borderline disturbing” and said that widespread price overheating is emerging. He noted that given the persistent nature of the price pressures, the Fed’s “all options remain open” to bring inflation back down.

The caution follows a similar assessment from Fed’s Lorie Logan, who said inflation is trending significantly above the 2% goal. While Goolsbee had previously stated that the Fed needs to admit its failure to manage inflation effectively, he described current economic growth and employment as steady. He did, however, remark that the recent rapid build-out of AI data centers resembles “old-fashioned overheating” in the economy.