The Fed's Goolsbee issues a warning: High inflation "heading in the wrong direction", soaring service prices becoming the biggest concern.

Chicago Fed President Charles Evans said he remains concerned about inflation and questioned whether all factors leading to price increases are temporary. In an interview on Monday, Evans said, "We have been dealing with inflation that has been well above target and moving in the wrong direction." Policymakers kept rates unchanged last week, but forecasts released after the meeting showed that nearly half of the committee members believe at least one rate hike this year will be necessary. Inflation has not met the Federal Reserve's 2% target for over five years, and has risen in recent months, sparking concerns among Fed officials that maintaining rates at current levels will not fully cool price pressures. In May, inflation accelerated to its fastest pace in over three years, driven by elevated energy costs due to Iran's war and eroding wage growth for Americans. Evans stated that it is crucial for the Fed to assess whether temporary shocks like tariff increases or spikes in energy prices due to the Iran war are the only factors driving inflation higher. He described the rise in service prices unrelated to these shocks as "worrisome," noting that pressures in this area may be more persistent. The Federal Open Market Committee (FOMC) meeting held last week was the first meeting since Kevin Warsh took office as chairman in May. The Fed official previously stated his desire to reform the institution and announced the establishment of five working groups in key areas of monetary policy (including communication and the balance sheet). Evans agreed with Warsh's view that the central bank should not provide too much forward guidance on future rate actions. He added that incorrect predictions about the future direction of the economy could damage the Fed's credibility.