Eric Rosengren Previews CPI Report

Summary

Bloomberg Talks: "Eric Rosengren Previews CPI Report"

Date: October 23, 2025
Host: Bloomberg
Guest: Eric Rosengren, Former President of the Boston Federal Reserve

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Episode Overview

This episode explores expectations and implications surrounding the upcoming Consumer Price Index (CPI) report, with in-depth analysis from former Boston Fed President Eric Rosengren. The discussion dissects key drivers of inflation, the policy environment, and the reliability of data informing Federal Reserve decisions—all set in the tense context of a pivotal moment for US monetary policy.

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Key Discussion Points & Insights

1. CPI Expectations and Inflation Outlook

• Anticipated Numbers:
  • Eric Rosengren (00:50): "Expecting to see that both the CPI and the core CPI are at 3.1%. So for the overall CPI, it was at 2.9% before. That's a bit of an increase."
• Drivers of Higher CPI:
  • Ongoing tariff impacts on goods: apparel, furniture, sporting goods
  • Rising food prices in multiple categories
• Implications:
  • Stagnant progress towards the 2% target
  • The persistence of 3%+ inflation presents a dilemma for the Fed as it balances inflation versus labor market health

2. Assessing the Sources of Inflation

• Tariffs & Policy-Induced Pressures:
  • Eric Rosengren (01:49): "The labor market, while it has been softer, is still fairly close to the Fed's estimate of full employment...I would not be somebody who would view this as because it's partly coming from tariffs, that it should be ignored."
• Electricity, Food, and Shelter Costs:
  • Some areas (e.g., natural gas and shelter) offer relief, but are outweighed by persistent pressures elsewhere
• Duration Above Target:
  • "We've been above the 2% inflation target for over four years. So at some point the Fed has to start seeing some improvement inflation."

3. Inflation Origins: Fiscal, Immigration, and Monetary Policy

• Policy Contributions:
  • Eric Rosengren (02:44): "It's certainly fiscal policy induced. So tariffs definitely have an impact...immigration policy is a policy. That probably means that some of the food prices have gone up as labor costs have gone up..."
  • Rising costs for harvesting fruits and vegetables due to labor shortages
  • Debate over whether monetary policy is too accommodating
• AI & Productivity Uncertainties:
  • Should interest rates revert to pre-pandemic norms if productivity has structurally improved due to AI?
  • Fed projections suggest a long-run Fed funds rate closer to 3%, but the lack of progress on inflation makes it "unclear that we should be going back to the same interest rate that we were at prior to the pandemic." (03:41)

4. The Fed’s Next Move: To Cut or Not to Cut?

• Fed's Data Dilemma:
  • Upcoming CPI may rely heavily on estimates due to government job departures—data may be noisier and less reliable
  • Eric Rosengren (04:17): "Given the softness in labor market, I can understand a 25 basis point cut," but the unreliability of the data introduces risks
• Caveat on Interpretation:
  • Noise and potential inaccuracies could lead to surprises—underscoring the stakes in interpreting tomorrow’s number

5. Reliability of Economic Data

• Declining Data Quality:
  • Podcast Host (05:07): "How reliable was the data when we had it?"
  • Eric Rosengren (05:11): "I think the CPI report was a pretty good report...over the last few years it has deteriorated a little bit. But I think if we continue to be cutting back on statistical agencies, it'll get more unreliable as we go forward."
• Resource Constraints:
  • Fewer survey workers and closed offices are diminishing data quality—this trend could worsen

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Notable Quotes & Memorable Moments

• On the prospects for inflation improvement:

  "I think that indicates that we're not getting much progress on inflation, that this report actually is going to be a continuation of numbers that are at 3% or higher rather than moving down towards 2%."
  —Eric Rosengren (00:58)

• On policy-induced inflation:

  "Tariffs definitely have an impact on what the reported prices are going to be...immigration policy...means that some of the food prices have gone up as labor costs have gone up."
  —Eric Rosengren (02:48)

• On the noise in economic data:

  "This CPI report probably is going to be using more estimated results than normal...it could be noisier. And if it's noisier, it could be a surprise on the upside or the downside."
  —Eric Rosengren (04:22)

• On data reliability:

  "If we continue to be cutting back on statistical agencies, it'll get more unreliable as we go forward."
  —Eric Rosengren (05:15)

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Timestamps for Key Segments

• 00:50: Rosengren forecasts 3.1% CPI and explains underlying drivers
• 01:49: Discussion on whether the Fed can ignore certain sources of inflation
• 02:44: Exploration of policy-induced inflation and productivity dynamics
• 04:17: Risks of making a rate cut decision based on noisy/incomplete data
• 05:07 - 05:15: Debate around the reliability and future prospects for US economic statistics

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Summary

Eric Rosengren brings a pragmatic and analytical perspective to the complexities facing the Fed as it braces for another inflation print above target. The episode underscores unresolved policy questions—from tariffs to labor market shifts to the very numbers that policymakers depend on. Listeners gain a clear sense of the challenges in achieving both data reliability and policy precision as the US navigates another unpredictable inflation cycle.

Transcript

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[Podcast Host]

News so here's the latest this morning. All eyes on tomorrow's cpi. Print the first major data release in weeks, expected to show inflationary pressures mounting on the economy. The former Boston Fed President Eric Rosengrant has seen it all. He joins us now for more. Eric, welcome back to the program, sir. What are you anticipating to see what you expect to see tomorrow morning at 830 Eastern Time?

[Eric Rosengren]

Expecting to see that both the CPI and the core CPI are at 3.1%. So for the the overall CPI, it was at 2.9% before. That's a bit of an increase. It partly reflects some of the pressures coming from tariffs continuing to flow through so goods like apparel, furniture, sporting goods. But it's also that we're seeing food prices go up in a variety of areas. And I think that indicates that we're not getting much progress on inflation, that this report actually is going to be a continuation of numbers that are at 3% or higher rather than moving down towards 2%. So that is a challenge for the Fed as it tries to weigh how much emphasis to put on inflation and how much emphasis to put on what's happening in the labor market.

[Podcast Host]

Well, Eric, let's stay on that theme. Are they sources of inflation that this Federal Reserve can ignore?

[Eric Rosengren]

I don't think it should ignore. The labor market, while it has been softer, is still fairly close to the Fed's estimate of full employment. And in some of the areas, both in food prices, we've seen cost of electricity going up. Some of those trends, I think, are something we have to keep an eye on. And while there have been some negative pressures, for example, shelters come in a little bit better. Natural gas is likely to come in a little bit better. I think the overall package, we've been above the 2% inflation target for over four years. So at some point the Fed has to start seeing some improvement inflation. So I would not be somebody who would view this as because it's partly coming from tariffs, that it should be ignored.

[Tech Enthusiast]

Eric, is a lot of this inflation policy induced?

[Eric Rosengren]

Well, I think it is partly policy induced. It's certainly fiscal policy induced. So tariffs definitely have an impact on what the reported prices are going to be. I would also Say that the immigration policy is a policy. That probably means that some of the food prices have gone up as labor. Labor costs have gone up for people that are trying to harvest crops and fruits and vegetables have been an area in particular where we've seen rising prices. In terms of monetary policy, I think the question is how much of the pressures that we're seeing have been accommodated. So the Fed thinks it's restrictive, but if you think that the economy is more productive and that AI may contribute to that productivity, then it's a little unclear that we should be going back to the same interest rate that we were at prior to the pandemic. So the summary of economic projections that the Fed puts out is assuming that we'll see something, you know, Fed funds rate in the long run closer to 3%. So that would indicate a lot more room. But the fact that we've seen so little progress on inflation for the last six months indicates that you shouldn't be so confident that you know exactly what the real interest rate ought to be.

[Tech Enthusiast]

Well, not only that, the fact of the matter is the Fed will be sitting down and they won't have the labor market report, they're just going to have this inflation report. Do you think it's a mistake if the Fed cuts interest rates next week?

[Eric Rosengren]

I think that given the softness in labor market, I can understand a 25 basis point cut. I would highlight that while we're getting the CPI report, a lot of government workers left their jobs at the end of September and a lot of the source data may not be available. So this CPI report probably is going to be using more estimated results than normal. It will be interesting if the report highlights that this data may not be as reliable, which means it could be noisier. And if it's noisier, it could be a surprise on the upside or the downside. But it just says as we continue to have pressures on statistical organizations having enough people to gather the data, that this data may become noisier and harder to rely on.

[Podcast Host]

Eric, forgive the snark, but how reliable was the data when we had it?

[Eric Rosengren]

Sorry?

[Podcast Host]

How reliable was the data when we had it?

[Eric Rosengren]

I think the CPI report was a pretty good report. So they had significant amount of surveys across the country. They have had to cut back over time on the amount of survey work that they do. They've closed some offices. So I think that over the last few years it has deteriorated a little bit. But I think if we continue to be cutting back on statistical agencies, it'll get more unreliable as we go forward.

[Podcast Host]

Eric, your Jen, thanks for being generous with your time this morning. We appreciate it. The former Boston Fed President, Eric Rosengren.

[Tech Enthusiast]

Come on. Why is this taking so long? This thing is ancient.

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