Chicago Fed President Austan Goolsbee highlighted the growing uncertainty facing policymakers, warning that the evolving Middle East conflict is complicating the outlook for monetary policy. Speaking to CNBC, he said “the most important thing is to figure out the through-line of what is happening,” noting that the situation is “fraught” as no one can confidently assess how long the conflict will last or how it will unfold.
While FOMC projections still point to rate cuts ahead, Goolsbee emphasized that his policy stance will depend heavily on inflation progress. He cautioned against repeating what he described as the “team-transitory mistake” of 2021, when inflation risks were underestimated. The current environment, shaped by an energy-driven shock, makes it more difficult to determine whether inflation will continue trending toward target.
Goolsbee said he remains “fairly optimistic” that rates could move lower by the end of 2026, but stressed that further evidence is needed. “We do need to see progress,” he said, adding that the war “definitely throws a wrench into the plans.”
