Federal Reserve officials warn: Rising inflation expectations will become a "roadblock to rate cuts."

ChainCatcher news, Chicago Fed President and FOMC voting member Goolsbee warned that there are signs indicating that investors in the U.S. bond market are beginning to expect higher inflation, which would be a "significant danger signal" that could disrupt interest rate setters' plans for rate cuts.

In the week prior to Goolsbee's remarks, a closely watched University of Michigan poll showed that U.S. households' long-term inflation expectations reached their highest level since 1993. Goolsbee stated, "If you see market-based long-term inflation expectations starting to change like the survey results from the past two months, I would consider that a significant danger signal that requires close attention." The five-year forward rate is currently at 2.2%, while the University of Michigan survey shows consumers expect a long-term inflation rate of 3.9%.

Goolsbee indicated that if investors' expectations begin to align with those of U.S. households, the Fed will have to take action: "Almost regardless of the circumstances, you have to deal with this issue," he said.