Chicago Fed President Austan Goolsbee told the Semafor World Economy conference that persistently high oil prices from the Iran war could keep inflation above the Fed’s 2% target and delay prospective rate cuts from 2026 into 2027. The Fed currently holds the funds rate at 3.50%–3.75%; March minutes showed officials worried the conflict could prolong inflation or require hikes. Policymakers have raised their 2026 inflation forecast to about 2.7%, and markets have pared expected 2026 cuts to one. Chair Powell has similarly warned the war limits the Fed’s flexibility to cut until inflation is clearly back to 2%.

Goolsbee warned that Iran-war-driven high oil prices could keep inflation above the 2% target and push cuts into 2027; the Fed rate is 3.50%–3.75%, March minutes showed officials’ concern, policymakers raised their 2026 inflation forecast to ~2.7%, and markets pared 2026 cuts — taken together these facts point to a higher-for-longer rate path, which is negative for risk assets.