CHICAGO, September 24, 2026 – The President of the Federal Reserve Bank of Chicago, Austan Goolsbee, took the microphone and made a sobering statement for all economic policymakers around the world. Addressing his peers at the Official Monetary and Financial Institutions Forum, he stated that lowering consumer prices is not going to be an easy task. There might be a lot of economic pain experienced when it comes to bringing down the rates of inflation towards the Fed’s 2% target due to the challenges created by supply-side shocks.
For quite some time now, the central banks were holding out on the hope that the loosening of supply chain bottlenecks would take care of everything on its own. This was the soft landing approach that Goolsbee calls the “golden path”, which involved resolving the problem of inventories without doing any damage to the labor market. However, with the energy price swings and structural disruption, such an approach looks more and more risky.
“Supply shocks have come more frequently, hit harder and lasted longer,” Goolsbee said. He warned that when supply-side disruptions linger, the traditional logic of simply looking through temporary price spikes no longer holds.
And this is important since the interest rate hikes have an influence on mortgage rates, commercial lending, and even consumer lending throughout the Midwest. The reduction in the level of inflation in this environment might involve reducing demand on purpose, which would lead to more unemployment. “It’s going to be painful,” Goolsbee told reporters after the event. “It would necessarily be painful.”
His comments revealed an interesting difference in public messaging from the central bank. As far as official economic reporting goes, Goolsbee’s conservative approach contradicted recent remarks made by Fed Chairman Kevin Warsh, who believed that damaging labor markets is not always necessary in order to hit targets.
Investors look forward to lower lending costs, whereas companies keep struggling with high input prices. For its part, the Fed should figure out whether inflation is strong enough to warrant any additional caution.
It is worth noting that while Goolsbee serves as an influential regional Fed leader, he does not set interest rates alone. Monetary policy decisions rest with the broader Federal Open Market Committee, where officials weigh incoming employment figures from the U.S. Bureau of Labor Statistics and inflation metrics before adjusting borrowing costs. Still, Goolsbee’s warning from London suggests that if global supply shocks keep piling up, taming inflation may take far more than patience.
