Fed’s Goolsbee says he’s worried about inflation in ‘fraught but intense’ climate
Chicago Federal Reserve President Austan Goolsbee said Monday he is now more worried about inflation than unemployment, despite significant progress in the war with Iran.
In the CNBC interview, the central banker said policymaking is difficult in the current environment. He spoke shortly after President Donald Trump announced that progress had been made in negotiations with Iran and that further attacks on energy infrastructure would be halted for five days while negotiations continue.
“The most important thing is to understand the gist of what’s going on,” Goolsbee said in the “Squawk Box” interview. “What makes this a worrying but intense moment is that no one can tell us what will happen on the ground in the conflict in the Middle East and how long it will last.”
Goolsbee opposed a rate cut in December and said he agreed with the majority at the Federal Open Market Committee’s January and March meetings to keep short-term interest rates steady. He is not an FOMC voter this year, but will vote again next year.
Following Monday’s war news, traders increased their bets for a rate hike by the end of the year amid volatile market action, but they still expect a rate cut in 2027. Stocks rose and oil prices fell.
FOMC officials said last week that a majority expects a cut this year and next. But Goolsbee said his stance would depend on the course of inflation and warned against “a repeat of the team-hopping mistake” in which the Fed underestimated the severity of inflation in 2021.
“I’m pretty optimistic that interest rates might come down by the end of ’26, but I wanted to see evidence that we’re back to inflation moving towards 2%. [war] It definitely throws a monkey wrench into the plans. “We need to see progress,” he said.
