>> Inflation has been a thorn in the side of many Americans over the past 5 years making matters worse.

Is the recent uncertainty from tariffs and the around war.

Meanwhile, changes afoot at the Federal Reserve Bank.

Kevin Warsh was confirmed as the new chair and the central bank may be updating how it communicates rate changes here to break down what it all means for the country.

And for Chicago is Austan Goolsbee, the president of the Federal Reserve Bank of Chicago.

Thank you very much for joining us.

We appreciate your time.

>> Yeah, my pleasure.

Thank you for having me.

>> So what do the latest inflation numbers tell us?

>> Well, you never want to make too much hay out of anyone number.

You know, as as I would say, one month is no months.

You want to get several months.

But it before you think it's a trend we've been going the wrong way with inflation for several months in a row.

But this newest these newest numbers that we got this week.

We're encouraging the slowing down a little bit of the inflation that that we've seen over the past several months.

And if we got more months like the ones that that we got this week.

People I think would be feel.

Perhaps bit more comfortable.

>> And how does the Chicago area compared to what we're seeing nationally?

>> In Chicago, the inflation rate, it tends to be about the same in most parts of the country.

We've been deal.

And as you know it throughout the Midwest Chicago, but a color that population growth has been slower in the Midwest.

Then it has been in the rest of the country.

And so we have been the little bit with that on on the job market side.

But on inflation, that tends to be.

But there's a similar inflation rate everywhere.

>> mentioned the conflict with Iran at the top.

What sort of effect is the uncertainty over the Strait of Hormuz having on prices?

>> And not nothing good.

You know, it ever sense of where we're began.

But everybody that's driving a car.

Look out the window unit.

You know what's what's been happening to into inflation, especially on energy and gasoline prices.

Now, that was supposed to be going away started going away.

As you add these uncertainties that the conflict flares back up in my last a fair bit longer than what people had had been anticipating or than the market.

Futures contracts had been forecasting.

I think that's part of why you're seeing consumer confidence being as weakened as it is in these measures of consumer confidence that people are weighing the uncertainties.

That may be the price of gasoline is going to stay much higher than then where they thought it was going to be for for longer than that.

It has.

>> And beyond oil, be on gas prices.

Are we seeing any supply chain issues related to the war?

>> A little bit, but not much yet because in the run-up to the conflict, people had a little bit an idea that this was coming and they had built up some inventories.

So you haven't seen as much of an impact call it broader supply chain measures you will see, likely if the conflict continues for months and months more.

Now that said impact of higher energy prices is most directly felt at the gas pump or flying on airlines.

Anybody who's using the fields, but then you will likely see that work its way through the economy spill over onto the whatever the cost of FedEX packages, people who are using the vehicles, you'll see it in logistics.

Shipping transportation.

And so the thing the way that factors into broader inflation outside of just that energy sector, you are likely to see that continue a bit.

And even if all the conflict ended by tonight.

It's still going to take some time to re-establish.

And once the conflict in re establish that production capacity, some which were blown up so I do think we want to be realistic about how quickly we can return to normal even when the uncertainty is resolved.

>> Yeah, well, you another question that a lot of folks have of when things might get back to more of a normal baseline, even with tariffs no longer in place.

Are they still impacting consumer prices?

>> And that is hard to say, you know, because that there's still another shoe to drop that the administration some tariffs were disallowed and ma'am, and there might even be refunds.

But they've announced that they intend to replace all of those tariffs at approximately rates that they were before.

So to the extent that that still hangs over us.

I do think you're seeing that Hart least still factoring in kind of the consumer calculus that said.

Done as a one and done tariff tariffs are supposed to raise the prices, the level of prices once, but they're not supposed to be an extended inflationary thing.

And part of the dilemma, let's call it that.

The war began before the tariff impact on inflation and kind of worn away.

We're still living with that and hopefully the drop down of the inflation rate can still take place, at least for the tariff part in regardless of what happens in the from the from the oil shock part.

Yeah.

>> You know you your district spans 5 states in the Midwest.

What what are you seeing in the labor market in our region?

>> Mostly the labor market, these 5 states kind of heart of the Midwest, as you say, most of Iowa, Wisconsin, Illinois, Michigan, Indiana, the labor market has been stable but hasn't has been It it's not deteriorating.

It's not getting better and it's there's conflicting measures.

The hiring rate is extremely low as low as what's normally corresponds with the recession.

But the layoff rate is also extremely low.

What normally corresponds with the the height of the boom.

So we're still kind of trying to wrap our heads around this labor market where those 2 things are happening simultaneously.

It's very unusual.

I think that's because of their big because of the degree of of uncertainty the businesses are facing, then we'll let go of people that it took them a long time and it was hard to get.

But they do want to bring in new people because what if the paraphrase change?

What if the geopolitics changes in the short run?

So we're in a little bit of a holding pattern.

I think that mostly characterizes the labor market throughout the Midwest is that stable without being that that strong?

>> As we mentioned at the top of Kevin Morris was confirmed as the chair of the Federal Reserve.

what's your working relationship like with him?

>> pretty good of.

I knew I was in the first term of the Obama administration during the financial crisis.

And that was when governor was was was at the Fed is as a Fed governor and I kind of went through the financial crisis working pretty closely with him.

I welcome all institutions.

It's helpful to have some some knew rethinks and his task force is where he's going to look at 5 major issues facing the Fed like the measurement of inflation and how we communicate.

And that would discuss rates and the nature of the data and size, the balance sheet.

It's good that with that, think those things true.

Let's let's have a discussion about reforming the the way the Fed does business rent.

I think he's a serious guy.

I saw I saw as his actions in a moment of real stress in the economy.

In 2009, 10, 11 certainly hit battle So so I'm optimistic.

believe that's a Before we run out of time.

You know, one of the potential changes here is that Warsh announced the end of what's called forward guidance from the central bank.

What's the significance of that?

Can you tell us what that means?

>> Yeah, he did indeed, whether that's fancy central bankers phrase for discussing what the committee or the the central Bank thinks is going to happen in the future to rates.

That's the forward guidance.

Giving guidance.

The committee thinks it will do X, Y Z in the future.

He wants the do less of that and I'm sympathetic to doing less of that.

I say speculating about rates is runs the risk that you can undermine the credibility of the central bank anytime the central bank is saying we think we're going to do what?

You don't know what the conditions are going to be when it actually comes to that circumstance.

And then if you end up not doing it.

The market and the public say.

They made us a promise and then they didn't carry it out.

So your credibility takes a hit.

So I personally I'm not supposed to speak for anybody else.

Only for myself on the say I welcome that.

Let's let's rethink a bit.

The forward guidance and and says some of the speculation about the future.