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Federal Reserve Bank of Chicago President Austin Goolsbee speaks during the 29th annual Milken Institute Global Conference at the Beverly Hilton in Beverly Hills, California on May 6, 2026. <\/p>\n
Patrick T. Fallon | AFP | getty images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Chicago Federal Reserve President Austin Goolsbee said Thursday that energy inflation linked to the war in Iran has lasted longer than expected, causing a “stagflationary shock” to Asian economies.<\/p>\n
Speaking to CNBC’s Kaori Enzoji at the Bank of Japan-IMES conference, Goolsby said early estimates in futures markets expected energy prices to be “significantly lower” than current levels.<\/p>\n
Although oil prices have declined recently due to signs of progress in US-Iran peace talks, prices remain well above levels seen before the war. <\/p>\n
International benchmark Brent crude futures rose more than 1.81% to $96 a barrel, while West Texas Intermediate futures rose 1.71% to $90.21 a barrel.<\/p>\n
This compares to a price of $72 for Brent and $67.02 for WTI the day before the US and Israel launched attacks on Iran. <\/p>\n
Goolsby also warned that for Asian economies, because they are energy importers, “this is a good old-fashioned stagflationary shock.”<\/p>\n<\/div>\n
He said, “I have no regrets about dissenting at that meeting, because inflation has not proven to be as temporary as was initially advertised.”<\/p>\n Still, Goolsby said that if inflation starts to move back toward the Fed’s 2% target, interest rates “will eventually settle somewhere well below where they are today.”<\/p>\n<\/div>\n Asked about the possibility that artificial intelligence could boost productivity, Goolsby said he was concerned that financial markets could overestimate the real economic benefits of AI adoption.<\/p>\n “My concern is that the future increases in productivity that make us richer could lead to higher equity prices, leading to an increase in your wealth today knowing you’re going to get rich at some point in the future,” Goolsby said.<\/p>\n \u201cIt could encourage people to spend this money in the stock market or otherwise, and you could overheat the economy in the near term, before AI really increases productivity.\u201d<\/p>\n Goolsby said policymakers should keep an eye on signs that AI-linked stock market gains are spilling over into broader inflationary pressures.<\/p>\n “I want people to pay attention to this, are you seeing a big increase in consumer spending due to the increase in stock market wealth? Are you seeing data center investment driving up the cost of electricity for construction workers and that having a short-term impact on inflation in the US?”<\/p>\n He said this same dynamic could ultimately impact Asian economies because new technologies are rarely concentrated in one country.<\/p>\n “If AI is to increase productivity, it will soon come to Asian countries as well,” he said.<\/p>\n<\/div>\n
<\/strong>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. <\/p>\nAI is ‘overheating’ the economy<\/h2>\n