The independence of the Federal Reserve is under scrutiny again as political voices grow louder in Washington. Chicago Fed President Austan Goolsbee emphasized the importance of staying calm amid uncertainty. He spoke on CNBC and highlighted the risks of acting before understanding the full impact of potential new tariffs.
President Donald Trump recently demanded preemptive interest rate cuts in a Truth Social post. He sharply criticized Federal Reserve Chairman Jerome Powell, calling him “Mr. Too Late.” In addition, Trump’s team is reportedly exploring options to remove Powell from his position.
However, Goolsbee stressed that the independence of the Federal Reserve should not be compromised. He agreed with Treasury Secretary Scott Bessent, who compared that independence to a “jewel box.” According to Bessent, maintaining it is crucial for economic stability.
Goolsbee said the U.S. should take a cautious approach. “We’re getting retaliation announced. Tariff revisions are coming in 90 days. We must wait,” he explained. “We don’t yet understand how supply chains will be affected.”
Meanwhile, economic adviser Kevin Hassett recently told reporters that the Trump administration is still reviewing legal options. They are considering whether Powell could be removed as Fed Chair. These developments have reignited debate over how much control the White House should have over the Federal Reserve.
According to Goolsbee, policymakers should avoid rushing into decisions. Instead, they should focus on consistency and careful analysis. “We want to be the steady hand,” he said. “We must find the through line before jumping to action.”
He added that the independence of the Federal Reserve ensures better economic outcomes. “Countries without it see higher inflation, more unemployment, and slower growth,” Goolsbee noted.
Ultimately, the pressure on monetary policy is building. But many within the system, including Goolsbee and Bessent, are calling for restraint. They agree that the independence of the Federal Reserve remains one of America’s most valuable economic tools.
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