A Fed Official Just Said Rate Cuts Could Wait Until 2027
What Goolsbee Actually Said
Austan Goolsbee, the president of the Bank of Chicago, made waves on Monday when he suggested that if oil prices stay elevated, might not cut interest rates until 2027. That's not a typo. For most of the past year, the running assumption in financial markets was that rate cuts were coming sometime in 2025 — maybe a couple of them, maybe more. Goolsbee just moved the goalposts by potentially two full years.
To understand why that matters, a quick bit of context. The — the central bank of the United States — controls a key that influences the cost of borrowing money across the entire economy. When raises rates, mortgages get more expensive, car loans cost more, credit card compounds faster, and businesses find it pricier to expand. spent 2022 and 2023 aggressively hiking rates to fight . The hope — and the expectation that had been building in markets — was that the worst was behind us, and cuts were on the horizon.
Goolsbee's comments suggest that hope may be premature.
Why Oil Prices Have Anything to Do With This
At first glance, it might seem strange that oil prices would affect when cuts rates. But the connection is direct. Oil is baked into the cost of almost everything — shipping goods, manufacturing products, heating homes, running airlines. When oil prices rise, businesses pass those costs on to consumers, and goes up. When goes up, has less room to cut rates, because cutting rates tends to stimulate the economy and can make worse.
Goolsbee's concern is essentially this: if oil stays expensive, stays stubborn, and 's hands stay tied. The central bank has a dual mandate — keep prices stable and keep employment healthy. Right now, the prices side of that equation is the problem child.
It's worth noting that oil prices actually closed sharply lower on Monday, reportedly on optimism around potential U.S.-Iran talks, which could eventually bring more Iranian oil supply back to the global market and ease price pressure. But Goolsbee's warning was about the *risk* of sustained high oil prices — not a guarantee, but a scenario is taking seriously enough to plan around.
What This Means for Your Money
If you have a variable-rate , a line of credit, or significant credit card , the prospect of rates staying higher for longer is genuinely bad news. These products all get cheaper when cuts rates, and more expensive when it doesn't. Anyone who has been waiting to refinance a or lock in a better rate is looking at a longer wait than they'd hoped.
For renters hoping to buy a home, elevated rates keep monthly payments high, which effectively prices many buyers out of the market. The housing market has already been grinding through a difficult period precisely because rates have stayed elevated for so long. Another year or two of the same is not the news anyone wanted to hear.
On the investing side, higher rates for longer tend to be tough on growth stocks — especially tech companies — because their future earnings become less valuable in today's dollars when rates are high. It's a mathematical thing called discounting, and it punishes companies that are expected to grow big eventually but aren't making much money right now. Safer, income-producing investments like and high- savings accounts, on the other hand, continue to look relatively attractive in a high-rate world.
The Bigger Picture
One Fed official's comments don't set policy — that's decided collectively by the Federal Open Market Committee, which meets roughly every six weeks. Goolsbee is known for being more cautious and data-driven, so his remarks weight, but they're not gospel. Markets will be watching every report and oil price tick between now and the next Fed meeting.
What Monday's comments really signal is that isn't done watching, and it isn't done waiting. The soft landing — the dream scenario where comes down without a — is still possible. But it's looking less like a smooth glide path and more like a bumpy, extended approach. Buckle up.