Chicago Federal Reserve President Austan Ghoulsby.
Kate Rooney | CNBC
Federal Reserve Bank of Chicago President Austan Ghoolsby urged President Donald Trump on Monday to reduce central bank independence as President Jerome Powell strengthened criticism.
“The long-term expectation that the Fed would return inflation to its 2% target was very important. That’s why the Fed’s independence is very important,” Goolsbee said in CNBC’s “Squawk Box.”
“If there is interference in the long term, it would mean higher inflation, which means worse growth and higher unemployment.
Trump collected another salvo in Powell on Friday for not lowering interest rates. There have also been talks that Trump may attempt to pull the financial policy string by setting up a “shadow chair” that could undermine Powell’s authority by law and perhaps.
“If there’s a Fed chairman who understands what he’s doing, interest rates will also go down,” Trump said. “He should bring them [interest rates] under. “
White House economic adviser Kevin Hassett said Friday he was assessing whether Trump and his team could remove the Fed’s chair. Powell previously stated that he could not be fired under the law and intends to serve as chairman in May 2026 through the end of his term.
“I’ve been with the Fed for over two years. Before I’m with the Fed, I’d say, economists are basically unanimous that Fed independence is very important,” Goolsbee said. “And to see why, look at the countries they don’t have independence. They have higher inflation, higher unemployment, and poor growth.”
