Fed Official Warns Inflation Battle May Bring Hardship

WHO:

Fast Company - Austan Goolsbee, president of the Federal Reserve Bank of Chicago

AP - Kevin Warsh, Fed Chairman

WHAT:

Bloomberg Markets - Goolsbee described the situation as “exactly the kind of painful trade-off between employment and inflation that stagflationary shocks always impose on the central bank.”

Fast Company - Goolsbee stated, “It’s going to be painful,” in later remarks to reporters, emphasizing that the economic pain would be necessary.

Fast Company - Goolsbee stated that the Fed may have to cause economic pain in the form of higher unemployment to combat high inflation.

Bloomberg Markets - Goolsbee described the situation as a "painful trade-off between employment and inflation."

Fast Company - The Fed raised its key interest rate for the first time in three years to about 3.9%.

WHERE:

Fast Company - Goolsbee spoke in London.

WHEN:

Fast Company - Goolsbee's speech occurred on a Monday.

AP - The Fed lifted its key interest rate for the first time in three years last Wednesday.

WHY:

Fast Company - Goolsbee indicated that persistent supply shocks, including higher oil prices from the Iran war and tariffs, have driven up inflation.

Bloomberg Markets - Goolsbee emphasized that the Fed cannot ignore repeated and persistent supply shocks.

HOW:

Fast Company - Goolsbee explained that the Fed needs to raise rates to lower consumer and business demand to align with reduced supply.

AP - Historically, the Fed fights inflation by raising interest rates to cool borrowing and spending.

(UPDATED September 21, 2026 20:57 UTC)

Goolsbee has characterized the current economic situation as a painful trade-off between employment and inflation, a challenge that stagflationary shocks consistently present to the central bank. He further emphasized to reporters that this economic pain is necessary, stating, “It’s going to be painful.” These remarks highlight the difficult choices facing policymakers as they navigate these complex economic conditions.

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(UPDATED September 21, 2026 19:59 UTC)

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, delivered a speech in London where he warned that the Fed may need to inflict economic pain, including higher unemployment, to tackle persistent inflation. He highlighted the painful trade-off between employment and inflation, noting that the Fed recently raised its key interest rate for the first time in three years to about 3.9%. Goolsbee attributed the rising inflation to ongoing supply shocks, such as increased oil prices from the Iran war and tariffs, emphasizing that the Fed must raise rates to reduce consumer and business demand in response to these challenges.