Fed Officials Urge Caution as Inflation Persists
Richmond Fed President Tom Barkin and Chicago Fed President Austan Goolsbee signaled concern about inflation and rising AI investment.
Updated on Nov. 9, 2026 in Inflation
Live Poll
Do you think the Fed should raise interest rates to fight inflation?
Richmond Fed President Tom Barkin urged caution in managing inflation, which has run above the Fed's 2% target for nearly six years. Chicago Fed President Austan Goolsbee separately warned that AI investment could overheat the economy and intensify inflation.
Why it matters
Demand is healthy and inflation remains stubbornly elevated, making the direction of monetary policy relatively straightforward for policymakers. Many central bank officials believe AI investment is contributing to inflation, which is a key driver of current US economic growth.
Inflation has run above the Fed's 2% target for nearly six years, and the Fed raised interest rates in September for the first time since 2023 before holding steady in October. Barkin has not yet formed a baseline view on the December 8-9 meeting outcome.
The players
Tom Barkin
Tom Barkin is president of the Federal Reserve Bank of Richmond and will become a voting member of the Fed's policy-setting committee in 2027.
Austan Goolsbee
Austan Goolsbee is president of the Federal Reserve Bank of Chicago and a former chair of the Council of Economic Advisers under President Barack Obama.
The details
Barkin made his remarks to reporters after a local chamber of commerce event in Greer, South Carolina. Goolsbee spoke at an event in Chicago on Monday, warning that if AI technology underdelivers it could weaken business investment, stock prices and consumer spending, while overdelivering could displace more workers than expected.
Timeline
Inflation has run above the Fed's 2% target for nearly six years.
The Fed raised interest rates in September for the first time since 2023.
The Fed held interest rates steady in October.
The Fed meets December 8-9, when investors expect a rate increase.
Barkin becomes a voting member of the Fed's policy-setting committee in 2027.
Big Picture
The current caution follows the Fed's first rate increase since 2023, made in September, as inflation has stayed above the 2% target for nearly six years. Officials are now weighing whether AI-driven investment is adding to price pressures.
Higher interest rates can raise borrowing costs for mortgages, car loans and credit cards. Businesses have said they plan to pass rising costs on to customers, which could keep grocery and goods prices elevated.
The takeaway
Inflation remaining above target for years means policymakers are unlikely to ease quickly, so households should plan for borrowing costs to stay elevated. Watching the December Fed decision is a practical way to gauge the next move.
What happens next
The Federal Reserve meets December 8-9, when investors expect officials to raise interest rates.
Further reading
For more on the broader forces behind rising prices, see our Inflation coverage.
Live Poll
Do you think the Fed should raise interest rates to fight inflation?
