Golden Finance reported that Chicago Fed Chairman and FOMC voter Goulsby warned that there are signs that investors in the U.S. bond market are beginning to expect higher inflation, which will be a "major red flag" that could disrupt interest rate cut plans by interest rate makers. A week before Goulsby’s remarks, a highly-watched University of Michigan poll showed that long-term inflation expectations for U.S. households hit their highest levels since 1993. “If you see long-term inflation expectations based on markets start to change like the results of the past two months, I would think it’s a major red flag that needs high attention,” said Goulsby. The five-year forward rate is currently at 2.2%, while the University of Michigan survey shows that consumers expect long-term inflation to be 3.9%. Goulsby said that if investors' expectations start to converge with those of American households, the Fed will have to act: "You have to deal with this issue almost whatever the situation," he said.