Fed’s Goolsbee: Energy inflation more persistent than expected
Chicago Federal Reserve President Austan Goolsbee said Thursday that energy inflation tied to the war in Iran has lasted longer than anticipated, creating stagflationary pressure for Asian economies. Speaking to CNBC at the Bank of Japan-IMES Conference, Goolsbee noted that futures markets had initially expected energy prices to be significantly lower than current levels. While oil prices have eased recently amid signs of progress in U.S.-Iran peace talks, they remain well above pre-war levels. Brent crude traded at $96 per barrel and West Texas Intermediate at $90.21, compared with $72 and $67.02 respectively before the strikes on Iran. Goolsbee, who voted against the Federal Reserve’s final rate cut in 2025, said he does not regret the dissent because inflation has not proved as temporary as advertised. He added that if inflation moves back toward the Fed’s 2% target, interest rates would eventually settle well below current levels. On artificial intelligence, Goolsbee expressed concern that stock market gains linked to AI could overheat the economy before productivity gains materialize, and urged policymakers to watch for spillover into broader inflation.
What’s reported
Energy inflation tied to the Iran war has lasted longer than expected, according to Chicago Fed President Austan Goolsbee.
Goolsbee described the impact on Asian economies as a “stagflationary shock of the old-fashioned variety” because they are energy importers.
Oil prices have eased on signs of U.S.-Iran peace progress but remain above pre-war levels: Brent at $96/barrel, WTI at $90.21.
Pre-war Brent was $72 and WTI was $67.02 on the day before U.S. and Israel launched strikes on Iran.
Goolsbee voted against the Fed’s final 2025 rate cut; he wanted evidence that inflation would not be persistent.
He said inflation has not proved as temporary as initially advertised.
Goolsbee stated that if inflation returns to the 2% target, interest rates will settle “well below where they are today.”
He warned that AI-driven stock market gains could encourage spending before productivity increases, potentially overheating the economy.
Goolsbee urged monitoring of consumer spending increases from stock market wealth and data center investment effects on inflation.
The same AI dynamic could eventually affect Asian economies as technologies spread.
Open questions
The article does not specify when the Iran war began or the precise timeline for energy price changes. It also does not detail the specific terms of U.S.-Iran peace talks or the exact date of the Fed’s final 2025 rate cut.
Key figures
Austan Goolsbee – Chicago Federal Reserve President
Kaori Enjoji – CNBC reporter (interviewed Goolsbee)
Sources: CNBC
