Chicago Federal Reserve President Austan Goolsbee has emphasized the importance of central bank independence in fighting inflation. In a recent interview on CNBC’s “Squawk Box,” Goolsbee said that reducing the Fed’s independence would lead to higher inflation, worse growth, and higher unemployment.
Goolsbee cited long-run expectations as a critical factor in the Fed’s ability to control inflation. He warned that any interference with the Fed’s decisions would result in suboptimal outcomes, including higher inflation rates. The Chicago Fed President also noted that countries without central bank independence tend to experience worse economic performance.
Goolsbee’s comments come amid growing criticism of Federal Reserve Chair Jerome Powell by President Donald Trump. Trump has accused Powell of not lowering interest rates quickly enough and has floated the idea of appointing a “shadow chair” who could undermine Powell’s authority. However, Powell has stated that he cannot be fired under law and intends to serve out his term as chair.
Despite the controversy, economists generally agree that Fed independence is crucial for effective monetary policy. Goolsbee echoed this sentiment, stating that economists are largely unanimous in their support for central bank independence.
Source: https://www.cnbc.com/2025/04/21/chicago-feds-goolsbee-says-fed-independence-is-critically-important-for-its-inflation-fight.html