Highlights

Chicago Federal Reserve President Austan Goolsbee emphasized the importance of central bank independence to curb inflation. He warned that undermining this independence could lead to inflation roaring back. His comments followed recent legal inquiries involving Fed Chair Jerome Powell, which Goolsbee suggests could be politically motivated. The independence debate comes amid U.S. discussions paralleling concerns observed in less stable economic regions.

Sentiment Analysis

• The sentiment regarding the independence of the Federal Reserve is mixed with cautious undertones.
• Goolsbee's cautious remarks highlight potential negative outcomes of political interference.
• The prospect of Powell facing a legal investigation adds a layer of uncertainty.
• 40%

Article Text

During an interview with CNBC's "Squawk Box," Austan Goolsbee, President of the Chicago Federal Reserve, expressed serious concerns over the growing attacks on the central bank's independence and its chair, Jerome Powell. Goolsbee articulated that any attempts to diminish the central bank's autonomy might lead to a resurgence of inflation, undermining economic stability.

The dialogue arises shortly after Fed Chair Powell disclosed being subpoenaed by the Department of Justice regarding financial mismanagement related to the extensive refurbishment project at the Fed's headquarters in Washington, D.C. The overspending issue has sparked tensions between the Federal Reserve and the White House, hinting at a potential legal conflict targeting Powell.

Although Goolsbee refrained from addressing the legal aspects directly, he supported Powell's view that the inquiry might serve as a stratagem for President Donald Trump to sway interest rate policies. This situation draws attention to repeated critiques by Trump, who has persistently sought significant cuts to interest rates and labeled Powell as "Too Late." Nonetheless, the Fed has already executed rate cuts thrice since September 2025.

With Powell's chairmanship nearing its end, Goolsbee emphasized the paramount importance of the Fed's independence for achieving macroeconomic goals. Drawing parallels to nations like Zimbabwe and Russia, he highlighted that similar movements in those regions have compromised their economic standings.

Goolsbee, holding a background in Democratic politics and having served under President Barack Obama, illustrated a transition to a non-partisan stance upon joining the Federal Reserve. He praises Powell's instrumental role in reducing inflation without instigating a recession, terming him a "first-ballot Hall of Famer."

Key Insights Table