Fed Officials Warn of Intensifying Inflation Risks

Federal Reserve officials Austan Goolsbee and Beth Hammack expressed growing concerns over intensifying inflation pressures in separate and joint appearances this week, attributing the risks to surging oil prices from the ongoing Iran conflict and lingering effects of trade tariffs. Goolsbee, president of the Chicago Federal Reserve Bank, spoke Tuesday at the Detroit Economic Club, while he and Hammack, president of the Cleveland Federal Reserve Bank, discussed the economy Wednesday on The Indicator from Planet Money podcast.

Goolsbee highlighted the potential for a stagflationary shock, where high energy costs could embed inflation deeper into the economy while slowing growth. Oil prices have risen sharply since the Iran war began on February 28, exacerbating price increases that tariffs had already prolonged beyond initial expectations. "The possibility of a stagflationary outbreak coming from high oil prices before the tariff inflation went away... would be the worst outcome," Goolsbee said, noting that sustained high prices could erode consumer confidence and lead to recessionary pressures. He described the job market as stable but not robust, with low hiring and firing...