Chicago Fed’s Goolsbee Warns Iran War Oil Shock May Delay Rate Cuts Until 2027

Chicago Federal Reserve Bank President Austan Goolsbee told CBS News that the Iran war’s oil‑price shock is making him rethink his earlier expectation that the Fed could cut interest rates multiple times in 2026, warning that persistent inflation could push any easing out to 2027 at the earliest. Speaking only for himself and not the full Fed, Goolsbee said that before the conflict he had been on the “optimistic side” about rate cuts, but rising fuel costs and a national average gasoline price now around $4.09 a gallon — more than $1 above pre‑war levels — have “complicated” that view. He pointed to private forecasts and CME FedWatch data now implying no rate cuts this year, and flagged the April 10 Consumer Price Index report, which economists expect to show inflation re‑accelerating to about 3.1% annually from 2.4% in February. Goolsbee cautioned that higher energy prices are squeezing already strained household budgets, risking a pullback in consumer spending that has been “the backbone of our growth,” and said businesses in his Midwest district are “sitting on their hands” amid uncertainty over oil, tariffs and where rates will settle. His comments underscore how the Iran war is feeding directly into U.S. inflation and interest‑rate expectations, heightening the risk that high borrowing costs and weaker spending could cut short what he called the “extended nature of this boom.”