Headline: Fed’s Goolsbee: Rate cuts could slip into 2027 if Iran war keeps oil and inflation elevated — what that means for crypto Austan Goolsbee, president of the Federal Reserve Bank of Chicago, warned Tuesday that the central bank may need to keep interest rates higher for longer — possibly not cutting them until 2027 — if the war involving Iran keeps oil prices elevated and inflation above the Fed’s 2% target. Speaking at the Semafor World Economy conference, Goolsbee stressed the Fed’s mandate: “it’s our job to get inflation back to 2%,” and said persistently expensive energy could “start pushing” potential rate cuts “out of ’26.” Before the conflict, he had expected tariff‑driven inflation to ease this year and even anticipated “multiple rate cuts in 2026.” But in an interview with the AP, he added that the longer inflation remains high, “realistically, I think that starts pushing it out of ’26.” Key facts and context - The Fed is currently holding its benchmark federal funds rate in a 3.50%–3.75% range after leaving policy unchanged at its March meeting. - Minutes from that March meeting showed officials were concerned the Iran war’s impact on energy could keep inflation above 2% for longer and “could call for rate hikes” if price pressures fail to ease. - In recent projections, Fed policymakers raised their 2026 inflation forecast to roughly 2.7%, citing gasoline and other energy costs as a drag on disinflation. - Markets have already trimmed rate‑cut expectations: traders who once priced in four cuts for 2026 pared forecasts down to one after oil briefly spiked to about $115 per barrel during the Iran conflict, pushing headline inflation back toward 3%. - Fed Chair Jerome Powell has echoed the caution, saying the Iran war clouds the outlook and leaves the central bank with “limited flexibility” to cut until there is clearer evidence that inflation is sustainably moving toward 2%. Implications for crypto markets Higher-for-longer interest rates and a stronger dollar tend to weigh on risk assets, including cryptocurrencies. Specific channels to watch: - Risk sentiment: Delayed monetary easing could reduce liquidity and risk appetite, pressuring crypto prices that have shown sensitivity to macro shifts. - Mining and energy costs: Elevated oil and broader energy prices can raise operational costs for some mining operations, potentially impacting miners’ margins and supply dynamics. - Correlations and flows: If investors rotate into traditional hedges like commodities or energy stocks amid geopolitical risk, capital flows into crypto could slow short‑term price rallies. Bottom line: The Fed’s path depends heavily on whether wartime energy disruptions abate. If oil and inflation stay stubborn, policymakers — per Goolsbee and Powell — may keep policy restrictive into 2027, a scenario that could reshape macro liquidity and risk asset performance, including crypto. Read more AI-generated news on: undefined/news