Chicago Fed’s Goolsbee says Fed independence is ‘critically important’ for its inflation fight

Federal Reserve Bank of Chicago President Austan Goolsbee on Monday urged against reducing the central bank’s independence as President Donald Trump amped up criticism of Chair Jerome Powell.

“The long run expectations that the Fed would get inflation back down to the 2% target were critically important. Fed independence is critically important for that,” Goolsbee said on CNBC’s “Squawk Box.”

“When there is interference over the long run, it’s going to mean higher inflation, it’s going to mean worse growth and higher unemployment, because there’s just going to be a little less willingness to step up and do the hard things when the moment is tough,” he said, while declining to comment directly on what Trump has said.

Trump levied another salvo at Powell on Friday for not lowering interest rates. There have also been talks that Trump may try to pull strings on monetary policy both by legislation and possibly by installing a “shadow chair” who could undermine Powell’s authority.

“If we had a Fed Chairman that understood what he was doing, interest rates would be coming down, too,” Trump said, pointing to examples of falling prices. “He should bring them [interest rates] down.”

White House economic adviser Kevin Hassett said Friday that Trump and his team are assessing whether they can remove the Fed chair. Powell has said previously that he cannot be fired under law and intends to serve through the end of his term as chair in May 2026.

“I’ve been at the Fed for a little over two years. Before I was ever at the Fed, I would tell you, economists are basically unanimous that Fed independence is critically important,” said Goolsbee. “And to see why, just look at the countries where they don’t have Fed independence. Inflation is higher, unemployment is higher, growth is worse.”