Energy inflation has been more persistent than expected: Fed’s Goolsbee

Energy inflation tied to the war in Iran has lasted longer than expected, creating a “stagflationary shock” for Asian economies, Chicago Federal Reserve President Austan Goolsbee said Thursday.

Speaking to CNBC’s Kaori Enjoji at the Bank of Japan-IMES Conference, Goolsbee said that initial estimates in the futures markets had expected energy prices to be “a lot lower” than current levels.

While oil prices have eased recently on signs of progress in U.S.-Iran peace talks, prices remain well above levels seen before the war.

Brent crude futures, the international benchmark, gained over 1.81% to $96 per barrel, while the West Texas Intermediate futures gained 1.71% to $90.21 per barrel.

That compares with $72 price for Brent, and $67.02 for WTI the day before the U.S. and Israel launched strikes on Iran.

Goolsbee also sounded a warning for Asian economies, saying that, because they are energy importers, “it’s more just a stagflationary shock of the old-fashioned variety.”

The Chicago Fed President, who voted against the Federal Reserve’s final rate cut in 2025, said he dissented because he wanted evidence that inflation would not be persistent.

“I don’t regret dissenting at that meeting, because the inflation has not proved as temporary as was advertised at the beginning,” he added.

Goolsbee did say, however, that if inflation starts heading back to 2%, interest rates will “ultimately settle at some place well below where they are today.

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