Goolsbee warns tariffs and oil prices could push economy toward stagflation
The Chicago Fed president says the combination of trade tariffs and rising oil prices now worries him more than inflation alone.
Published
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said he is concerned that tariffs and oil prices could combine to produce stagflation, a mix of weak growth and persistent inflation.
The warning marks a shift in his focus. Goolsbee has previously said artificial intelligence itself is becoming an inflation problem, pointing to demand persistence and stalled progress toward the Fed's 2% target. His latest comments add a growth-side risk to that picture, one that a single interest rate tool cannot easily address, since tightening to fight inflation would risk deepening any slowdown.
The comments follow a month of hawkish signals from other Fed officials. Cleveland Fed President Beth Hammack has said the central bank needs more policy restraint and that inflation pressures are broadening beyond AI-related spending. That has put Goolsbee and Hammack on one side of a divide with Fed Vice Chair Philip Jefferson and New York Fed President John Williams, who have urged patience on rates.
Goolsbee's remarks land in a market still unsettled on the timing of the Fed's next move. By raising a growth-side risk alongside inflation, he complicates the case that hawks like himself and Hammack have been building through October, introducing a variable the rate-path debate has so far mostly left out.