Bloomberg Talks: "Eric Rosengren Previews CPI Report"

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

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.

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

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)

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

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.