WASHINGTON, March 23, 2026, 18:41 EDT
Chicago Fed President Austan Goolsbee on Monday left the door open to a rate cut this year—provided inflation comes down—but didn’t rule out a hike if the war with Iran keeps prices elevated. “Both scenarios are on the table,” he told CNBC. Reuters
This comes just a week after the Fed kept rates steady at 3.50%-3.75%, with officials signaling one cut for the year. But the Iran-driven oil shock changed the math fast. By Friday, futures traders were suddenly assigning about a 25% probability to a December hike—something that wasn’t even on the radar days before.
Wild price action into the close Monday. Brent tumbled 10.9% to $99.94 after Trump hit pause on Iran strikes for five days, while the S&P 500 jumped 1.15% and bets on a December rate hike faded to roughly 13%. But in the first hours of Asia trading Tuesday, U.S. crude bounced 1.6%—Iran pushed back on talk of negotiations with Washington.
Inflation took center stage for Goolsbee. “Inflation has got to be a little ahead of employment” for the time being, he said, cautioning that pricier gasoline could push up inflation expectations—essentially, what households anticipate about future prices—and complicate the Fed’s efforts. Reuters
He noted the U.S. might return to “multiple rate cuts for the year if inflation behaves,” though he didn’t rule out higher rates should inflation spiral “out of control.” Bloomberg Law News
Consensus remains elusive. San Francisco Fed President Mary Daly stuck to her line that there’s “no single most-likely path.” Governor Stephen Miran, who was the only dissenter at last week’s meeting, pressed his case for cuts again, insisting it’s still premature to change his stance on the labor market needing support. Reuters
Energy’s sway hasn’t let up for investors. “It’s all about the price of oil,” said Bob Doll, chief investment officer at Crossmark Global Investments, who expects volatility to persist. That short-term focus isn’t likely to shift soon. Reuters
There’s a catch: Goolsbee doesn’t get a vote this year. The Fed pegs him as an alternate for 2026, though he still joins policy talks with other nonvoting regional presidents.
For policymakers, the threat stands out. Roughly 20% of the world’s oil and LNG moves through the Strait of Hormuz, so any extended blockage would pressure both inflation and jobs — the Fed’s central concerns. Goldman Sachs on Monday bumped up its 2026 Brent oil target to $85 a barrel, warning it could reach $135 under a major supply shock.
The Fed gathers again April 28-29. Goolsbee signals rate cuts remain on the table, though a hike is back in play.
