Goolsbee Warns Energy Shocks May Delay Fed Rate Cuts

Chicago Federal Reserve Bank President Austan Goolsbee warned on March 25, 2025, that escalating energy shocks from the ongoing U.S.-Iran conflict in the Middle East could force the central bank to delay interest rate cuts or even raise rates if inflation spirals further. Speaking in interviews on PBS NewsHour and CNBC, Goolsbee highlighted the challenges posed by higher oil prices, which threaten both inflation control and economic growth under the Fed's dual mandate.

Goolsbee's remarks came days after the Federal Open Market Committee's March 18 meeting, where policymakers unanimously voted to keep the federal funds rate steady at 4.25 percent to 4.50 percent for the second consecutive session. The decision aligned with projections in the accompanying dot plot, which indicated a median expectation of one rate cut later in 2026. However, Goolsbee stressed that even this modest easing remains contingent on sustained progress toward the Fed's 2 percent inflation target. "We have to see progress on inflation for it to be realistic to expect rates to come down this year," he said, underscoring the data-dependent approach.

The comments reflect growing uncertainty within the Fed as...