In recent days, as US President Trump intensified his attacks on Fed Chairman Powell, the issue of the US Fed's independence has once again come under scrutiny.
On Sunday local time, Chicago Fed President Goolsbee expressed his views on the issue in a program. He stated, he hopes the US Fed can maintain its monetary policy independence, as it is crucial to the central bank's credibility.
"Economists almost unanimously agree that monetary policy should not be subject to political interference, and it is vital that the US Fed or any central bank can do the work it needs to do," Goolsbee said. "I strongly hope we do not find ourselves in a situation where monetary independence is questioned. Because that... would damage the US Fed's credibility."
Before Goolsbee made these remarks, Trump recently repeatedly urged Powell to cut interest rates to alleviate the economic pressure caused by his tariff measures. He also threatened again to fire Powell, sparking widespread controversy.
After Powell warned that tariffs could lead to stagflation, Trump harshly criticized Powell last week, saying he is always "late and wrong," and stated that "the sooner he leaves, the better." He also said, "If I want him to leave, believe me, he will leave very soon. I am not satisfied with him."
Powell was nominated by Trump as Fed Chairman in 2017, and his term will not end until next year. White House National Economic Council Director Hassett confirmed last Friday that Trump and his team are studying whether they can fire Powell.
The Impact of Tariffs on the Economy
Goolsbee also discussed the impact of Trump's tariffs on the economy on Sunday.
He pointed out that the "reciprocal tariffs" announced by Trump on April 2—later most tariffs were granted a 90-day suspension—exceeded the expectations of business leaders, who are concerned that tariffs "will have a considerable impact on their operations."
He stated, as businesses and consumers seek to stock up before Trump administration tariffs take effect, US economic activity may be "artificially inflated" this summer, then decline.
He said, "This preemptive purchasing behavior may be more pronounced on the corporate side," and specifically mentioned the automotive industry's stockpiling of imported parts.
Trump is confident that the US will successfully reach agreements with many countries during the 90-day suspension period. But Goolsbee expressed a cautious view on this.
"There are still many question marks," Goolsbee said. "We do not know how high the tariffs will be when they revisit the tariff issue after 90 days."
