Fed’s Goolsbee Keeps Door Open for Rate Hikes Amid Persistent Inflation

Chicago Fed President Austan Goolsbee indicated that the Federal Reserve has not ruled out further interest rate increases to combat persistent inflationary pressures, explicitly prioritizing inflation control over unemployment in his current risk assessment. The remarks come as core inflation remains stuck at 3.1%, while GDP growth has slowed to 0.7%. Goolsbee highlighted that the Middle East conflict remains a "wrench" in potential plans for rate cuts, though he noted recent progress in the Iran situation as a new geopolitical factor. This shift toward a more hawkish stance, despite some geopolitical developments, increases the uncertainty facing monetary policymakers. These developments have put downward pressure on equities while supporting the US dollar against the EUR/USD. Market participants are now reassessing the path of monetary policy as the Fed balances sticky inflation with evolving global risks.