The president of the Federal Reserve of Chicago, Austan Goolsbee.
Kate Rooney | CNBC
On Monday, the president of the Federal Bank of the Reserve of the Chicago Reserve, Austan Goolsbee, asked for the reduction of the independence of the Central Bank while President Donald Trump was criticizing President Jerome Powell.
“The long -term expectations according to which the Fed would bring inflation to the target of 2% was of crucial importance.
“When there are long-term interference, it will mean higher inflation, it will mean worse growth and higher unemployment, because there will just be a little less desire to intensify and do difficult things when the moment is difficult,” he said, while directly refusing what Trump said.
Trump launched another salvo on Friday to not have lowered interest rates. There have also been conferences that Trump could try to draw ropes on monetary policy both by legislation and possibly by installing a “shadow president” who could undermine the authority of Powell.
“If we had a president of the Fed who understood what he was doing, interest rates would also drop,” said Trump, highlighting examples of drop in prices. “They should lower them (interest rate).”
The White House economic advisor Kevin Hassett said on Friday that Trump and his team evaluate if they could remove the Fed chair. Powell previously said that he could not be dismissed under the law and intended to serve until the end of his mandate in May 2026.
“I have been at the Fed for a little over two years. Before I will never be at the Fed, I would tell you that economists are fundamentally unanimous that the independence of the Fed is extremely important,” said Goolsbee. “And to see why, just look at the countries where they have not fed independence. Inflation is higher, unemployment is higher, growth is worse.”
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