Goolsbee flags inflation as ‘bad news’

On May 2, 2026, Chicago Federal Reserve President Austan Goolsbee described the latest US inflation readings as “bad news” for the central bank. His remarks underscore rising concern inside the Federal Reserve about the persistence of price pressures and the implications for future interest rate decisions.

Goolsbee indicated that the recent data argues for caution on lowering interest rates. He suggested that the Fed should wait for clearer signs that inflation is moving down before considering cuts, highlighting the tension between inflation control and any push to ease monetary policy.

Goolsbee focused on the Personal Consumption Expenditures price index, the Fed’s preferred gauge of inflation. He noted that the PCE index rose at an annual rate of 3.5% in March, well above the Federal Reserve’s stated 2% inflation target.

The 3.5% reading reinforces concerns that inflation is not yet on a firm path back to target. By pointing specifically to the Fed’s preferred measure, Goolsbee framed the latest data as a direct challenge to policymakers aiming to balance price stability with economic growth.

Beyond headline figures, Goolsbee highlighted inflation in service industries as a particular source of unease. He emphasized that prices in services are rising even though these sectors are generally less exposed to factors like tariffs or swings in oil prices.

Because services are typically more insulated from such external shocks, Goolsbee’s comments suggest that underlying domestic price pressures are playing a larger role. This pattern complicates the Fed’s task, as it points to inflation embedded in areas less affected by temporary or imported cost increases.

Goolsbee’s remarks came against the backdrop of geopolitical tensions, including the U.S.-backed war with Iran, which has contributed to higher oil prices. He noted that, despite such external drivers, service-sector inflation remains elevated, making it harder to attribute overall price pressures solely to global shocks.

Within the Federal Reserve, his comments reflect a growing unease about how persistent inflation might shape upcoming policy meetings. While views among officials are divided on the timing of any rate adjustments, Goolsbee’s stance points toward a more cautious approach until inflation shows clearer progress toward the 2% objective.