WASHINGTON, March 23, 2026, 18:41 EDT
Chicago Federal Reserve President Austan Goolsbee said on Monday the U.S. central bank could still cut interest rates this year if inflation cools, but it may also need to raise them if the war with Iran leaves price pressures stuck higher. Speaking on CNBC, he signaled that both outcomes are now in play. 1
That matters because the Fed only last week held its benchmark rate at 3.50%-3.75% and still pointed to one cut this year. Since then, the oil shock tied to the Iran conflict has scrambled that outlook and, by Friday, futures were pricing roughly a 25% chance of a December hike after implying no such risk only days earlier. 2
Markets swung again before Monday was over. Trump’s five-day pause on planned strikes against Iran’s power plants sent Brent down 10.9% to $99.94 a barrel, lifted the S&P 500 1.15%, and cut the implied odds of a December hike to about 13%; by early Asia trading on Tuesday, though, U.S. crude was back up 1.6% after Iran denied talks with Washington. 3
Goolsbee’s emphasis was on inflation. He said “inflation has got to be a little ahead of employment” for now, warning that higher gasoline prices can feed into inflation expectations — what households think prices will do next — and make the Fed’s job harder. 1
He also said the United States could get back to “multiple rate cuts for the year if inflation behaves,” but added that he could still see higher rates if inflation spins “out of control.” 4
Other officials are hardly lining up behind one path. San Francisco Fed President Mary Daly said there was “no single most-likely path,” while Governor Stephen Miran, the lone dissenter at last week’s meeting, kept arguing for cuts and said it was still too early to rewrite his view that the labor market needs support. 5
For investors, the signal still runs through energy. Bob Doll, chief investment officer at Crossmark Global Investments, said volatility was likely to continue and that, in the short run, “it’s all about the price of oil.” 6
One wrinkle matters. Goolsbee is not on this year’s voting roster. The Fed lists him as an alternate member for 2026 and says nonvoting regional bank presidents still take part in discussions. 7
The risk for policymakers is plain enough. The Strait of Hormuz carries about a fifth of global oil and liquefied natural gas flows, and a long disruption would hit both sides of the Fed’s mandate — stable prices and strong employment — at once; Goldman Sachs on Monday raised its 2026 Brent forecast to $85 a barrel and said prices could hit $135 in a severe supply shock. 8
The next Fed meeting is set for April 28-29. For now, Goolsbee’s message is that cuts are still possible, but the door to a hike is open again. 9
