Chicago Fed’s Goolsbee Urges Protection of Central Bank Autonomy as Trump Ramps Up Pressure on Powell
Summary
Chicago Fed President Austan Goolsbee cautioned that any attempt to undermine the Federal Reserve’s independence would erode its credibility and risk higher inflation, slower growth, and a weaker labor market . His remarks on CBS’s Face the Nation come in the wake of former President Donald Trump’s renewed public criticism of Chair Jerome Powell and threats of removal, despite the Federal Reserve Act allowing dismissal only “for cause” and no precedent for firing a Fed chair over policy disagreements . White House economic adviser Kevin Hassett confirmed the Trump team is exploring whether a legal pathway exists to oust Powell, even though Powell’s term runs until May 2026 and he maintains he cannot be removed except for misconduct .
Fed Chief’s Independence Warning
Federal Reserve Bank of Chicago President Austan Goolsbee warned against efforts to curtail the central bank’s political independence, stressing that shielding monetary policy from partisan influence is key to maintaining economic stability . Speaking on CBS’s Face the Nation, he noted that economists broadly agree politically insulated central banks deliver better outcomes, while those subject to interference typically suffer higher inflation, slower growth, and weaker job markets . “I strongly hope that we do not move ourselves into an environment where monetary independence is in question,” Goolsbee said, warning such moves would undermine the Fed’s credibility .
Trump’s Critique and Legal Hurdles
Last week, former President Donald Trump publicly lambasted Chair Jerome Powell for not cutting interest rates as aggressively as the European Central Bank, declaring Powell’s “termination cannot come fast enough” on his Truth Social platform . Trump’s outburst highlighted his frustration that U.S. rates remain steady amid mounting trade tensions and tariffs, even as the ECB has enacted multiple cuts in 2025 . However, legal experts point out that the Federal Reserve Act permits removal of a Fed chair only “for cause”—misconduct or incapacity—not policy disagreement, and no president has ever attempted such a dismissal .
National Economic Council Director Kevin Hassett confirmed on Friday that President Trump’s team “will continue to study” whether a lawful route exists to remove Powell, though he stopped short of endorsing immediate action . Powell’s current term runs through May 2026, and he has repeatedly emphasized his statutory protection, asserting he can be ousted only for cause under the law . International observers, including France’s finance minister, have warned that forcing out Powell could damage the dollar’s credibility and unsettle global markets .
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