Ostan Gulsby, president of the Federal Reserve Bank of Chicago, warned that broad-based increases in consumer prices in the United States point to possible overheating of the national economy and urged the Federal Reserve to develop tools to break the chain of rising inflation, with a particular focus on stabilizing the services sector.
Annual inflation accelerated to 3.8% in April 2026, the highest rate since 2023, the Bureau of Labor Statistics reported. The surge in prices was driven in part by higher gasoline costs amid the prolonged military conflict with Iran. Mr. Gulsby described the latest data as troubling and exceeding market expectations, noting persistent inflationary pressure in sectors that are not directly linked to import tariffs or energy costs.
In an interview with NPR, the Chicago Fed president said the United States faces an inflation problem and that it must be addressed. He argued that the central bank should act promptly to counter overheating in the core economy, especially in the services sector, which has proved relatively resistant to conventional price control measures. Rising price pressure in services, he said, threatens overall financial stability and requires a reassessment of monetary policy approaches.
The Federal Reserve left interest rates unchanged at its most recent meeting, but concern among policymakers is rising. Inflation has remained above the central bank’s 2% target for the past five years, presenting long‑term risks to economic growth. Officials warned that continued neglect of overheating signs could lead to uncontrolled increases in the cost of living and could force the Fed to adopt more aggressive tightening.
