Fed’s Goolsbee says he’s worried about inflation in ‘fraught but intense’ climate
Chicago Fed President Goolsbee Expresses Concern About Inflation Amidst Iran Conflict
Chicago Federal Reserve President Austan Goolsbee expressed his concerns about inflation on Monday, stating that he is more worried about inflation than unemployment, despite recent progress in negotiations with Iran.
Speaking in a CNBC interview, Goolsbee highlighted the challenges of policymaking in the current environment. His comments came shortly after President Donald Trump announced a temporary halt in attacks on energy infrastructure in Iran as talks continue.
Goolsbee, who had dissented on a rate cut in December, supported the decision to hold short-term rates steady at the January and March meetings of the Federal Open Market Committee. While he is not a voting member this year, he will have a vote next year.
Following the news of progress in the Iran conflict, traders reacted with volatility in the market, increasing bets of a rate hike by the end of the year while still expecting a cut in 2027. Stock prices surged higher and oil prices dropped.
While most FOMC officials anticipate a rate cut this year and another next year, Goolsbee emphasized that his stance will depend on the trajectory of inflation. He warned against underestimating inflation, citing the “transitory mistake” made by the Fed in 2021.
“I remain cautiously optimistic that rates could decrease by the end of 2026, but I need to see evidence of inflation returning to 2%. The current conflict in Iran complicates matters, and progress is essential,” Goolsbee stated.
It is crucial to monitor the developments in the Iran conflict and its impact on inflation before making any decisions regarding interest rates, according to Goolsbee.
