Fed’s Goolsbee says energy inflation from Iran war lasted longer than expected
The Story
Chicago Federal Reserve President Austan Goolsbee said Thursday that energy inflation tied to the war in Iran has persisted longer than anticipated, creating a stagflationary shock for Asian economies. Speaking at the Bank of Japan-IMES Conference, Goolsbee noted that futures markets had initially expected energy prices to be much lower than current levels. He also expressed concern that stock market gains linked to artificial intelligence could overheat the economy before actual productivity gains materialize.
Key Facts
- Energy inflation tied to the war in Iran has lasted longer than expected, creating a “stagflationary shock” for Asian economies, said Chicago Fed President Austan Goolsbee on Thursday.
- Goolsbee said initial futures market estimates expected energy prices to be “a lot lower” than current levels.
- Brent crude futures gained over 1.81% to $96 per barrel; West Texas Intermediate gained 1.71% to $90.21 per barrel.
- Before the U.S. and Israel launched strikes on Iran, Brent was at $72 and WTI at $67.02 per barrel.
- Oil prices have eased recently on signs of progress in U.S.-Iran peace talks but remain well above pre-war levels.
- Goolsbee voted against the Federal Reserve’s final rate cut in 2025 because he wanted evidence that inflation would not be persistent.
- He said he does not regret dissenting because inflation has not proved as temporary as was advertised.
- Goolsbee said if inflation moves back toward the Fed’s 2% target, interest rates would “ultimately settle at some place well below where they are today.”
- He is concerned that future productivity increases from AI may fuel high equity prices and encourage spending, overheating the economy in the near term.
- Goolsbee said policymakers should watch for signs that stock market gains linked to AI are spilling into broader inflation pressures.
- He added that the same dynamic could eventually affect Asian economies because new technologies rarely remain concentrated in one country.
Conflicting Reports
No conflicting reports identified in the source article.
Still Unclear
No open questions identified in the source article.
Misconceptions
No widespread misconceptions addressed in the source article.
Key Figures
- Austan Goolsbee: Chicago Federal Reserve President
- Kaori Enjoji: CNBC reporter (interviewer)
