• Services inflation remains elevated at around 3%, offsetting improvements in goods and energy prices.
  • Further rate cuts in 2026 are conditional on clearer progress toward the Fed's 2% target, with potential for "several more" reductions if inflation returns to that level.
  • Goolsbee praised Fed Chair nominee Kevin Warsh as a longtime collaborator, amid delays in Senate confirmation.

Chicago Fed President Austan Goolsbee stated on February 13, 2026, that services inflation remains elevated and "stuck around 3%," offsetting improvements in goods and energy prices partly due to base effects and tariffs. This makes further rate cuts conditional on clearer progress toward the Fed's 2% target, according to people familiar with his remarks.

Inflation cooled to 2.4% year-over-year in January 2026, down from 2.7% in December, with 130,000 jobs added and unemployment at 4.3%. However, services inflation stays "pretty high" and persistent with limited tariff exposure, Goolsbee noted. Tariffs have driven higher goods prices, though he expects their peak impact may have passed; overall, the economy shows mixed signals, with consumers as a key strength amid fiscal tailwinds like larger tax refunds adding $130 billion to households in early 2026.

Markets await upcoming PCE inflation data, expected at 3.1% core, and Fed minutes before the March decision, amid AI-related jitters pressuring stocks. Goolsbee signaled that if inflation returns to 2%, rates could fall "several more" times, potentially to around 3% as an estimate of neutral, while noting a modestly cooling but stable labor market and strong consumer spending. He indicated no rate cuts are expected at the next meeting despite recent data, with one cut possible post-new Fed chair confirmation if PCE improves.

In a human touch, Goolsbee praised Fed Chair nominee Kevin Warsh as a "longtime collaborator" and "big fan" from their work during the 2008 financial crisis, amid delays in Senate confirmation for a new chair. Expansionary fiscal policy provides tailwinds but complicates inflation control, he suggested.

Elevated services inflation pressures households via sustained high costs in non-tariff-exposed areas like housing and healthcare, while stable jobs and consumer strength support spending; however, "stuck" 3% inflation risks eroding purchasing power if unresolved. Goolsbee's cautious tone underscores debates on balancing employment and price stability, with other 2026 Fed speakers like Beth Hammack and Lorie Logan recently arguing against more cuts amid sticky inflation.

Inflation has exceeded 2% for over 4.5 years; Goolsbee dissented against the Fed's December 2025 rate cut, wary of assuming transience, echoing his past concerns on front-loading cuts. The Fed implemented three cuts late 2025, but voters like Hammack and Logan oppose near-term cuts. Goolsbee speaks again on February 19 at a financial crises conference, with broader context including tariff effects peaking and fiscal boosts.

Correction: An earlier version misstated the timing of Goolsbee's remarks; they were delivered on February 13, 2026.