Austan D. Goolsbee

Money Moves

Publicly warning that Iran war inflation complicates rate cuts

The S&P 500 sat near record highs at the end of February. Five weeks later, after a U.S.-Israeli air campaign shut down the world's most important oil chokepoint, the index has shed roughly 4% and Wall Street's biggest banks are cutting their forecasts for the rest of 2026. UBS Global Wealth Management lowered its year-end target from 7,700 to 7,500 on April 7, following Wells Fargo's steeper cut from 7,800 to 7,300 a week earlier.

Updated 7 days ago

Money Moves

Signaling conditional openness to rate cuts if inflation proves transitory

American retail sales went nowhere in December, the weakest holiday shopping finish since 2018. The Commerce Department reported $735 billion in sales—unchanged from November—while economists expected 0.4% growth. Eight of thirteen retail categories declined, with furniture and auto sales hit hardest by tariff-driven price increases. The data, delayed more than a month by a 43-day government shutdown, sent money markets repricing Federal Reserve rate cuts from two to three for 2026. New analysis from Bank of America reveals the structural fracture runs deeper than initially understood: in January, higher-income households' spending grew 2.5% year-over-year, while middle-income households managed just 1% and lower-income households only 0.3%.

Updated Feb 18

Rule Changes

Rotated off FOMC voting roster for 2026 after dissenting against December rate cut

The Federal Reserve held rates steady at 3.5-3.75% on January 28, 2026, in a 10-2 vote that exposed a stunning reversal in internal divisions. Fed Governors Stephen Miran and Christopher Waller dissented in favor of a 25-basis-point cut—the first time two sitting governors have dissented together in decades. Just six weeks earlier in December, the vote split 9-3 the opposite direction: Miran wanted a 50 basis-point cut while Goolsbee and Schmid opposed any cut at all. The December minutes revealed even supporters called that decision "finely balanced." Now the battle lines have shifted entirely, with some hawks turning dovish while the 2026 FOMC voting rotation brought three new hawks—Cleveland's Beth Hammack, Dallas's Lorie Logan, and Minneapolis's Neel Kashkari—replacing Chicago's Goolsbee and Kansas City's Schmid. Miran's four-month term expired January 31, though he stated he will remain until Trump names a permanent replacement.

Updated Feb 1

Money Moves

Voted against December 2025 rate cut, citing inflation concerns

The Federal Reserve cut interest rates by 25 basis points on December 10, 2025, in a deeply divided 9–3 vote—the most dissents in six years—bringing the funds rate to 3.5–3.75%. Minutes released December 30 revealed the decision was 'finely balanced,' with officials split over whether weak hiring or stubborn inflation poses the greater risk. The delayed BLS report released December 16 showed the economy lost 105,000 jobs in October and added only 64,000 in November, while unemployment climbed to 4.6%, the highest since September 2021. Combined with the November ADP report showing a 32,000 private-sector job loss concentrated in small businesses, the data confirmed the labor market weakened sharply in late 2025.

Updated Jan 2

Rule Changes

Dissenting against the latest cut, arguing for holding rates despite labor‑market softness.

In a single year the Fed has gone from peak post‑Covid rates to a clear easing cycle. December’s third 2025 rate cut pushes the federal funds range down to 3.5–3.75% and flips the switch on a new operating regime built around full‑allotment repos and steady Treasury bill buying.

Updated Dec 11, 2025