Austan Goolsbee said the Fed may need a more aggressive, frontloaded response if inflation is being driven by overheating demand, warning one more quarter-point rate rise likely would not be enough.
3.7% PCE inflation in July, up from 2.8% in February, has raised concern that services prices and AI-related spending are adding persistent demand pressure on top of the Iran war oil shock.
The Fed last week delivered its first rate increase in three years, and officials' median projections still point to only one additional quarter-point move this year before a hold in 2027.
Goolsbee said that path could still work if inflation proves mainly an energy supply shock, but two of the three scenarios he outlined would require higher rates rather than the traditional look-through approach.