Conflict Between the Fed and the White House Intensifies... Chicago Fed President Goolsbee Warns of Threats to Independence

Financial News, New York – Special Correspondent Lee Byung-chulAustan Goolsbee, president of the Federal Reserve Bank of Chicago, warned that attempts to undermine the independence of the Federal Reserve System (Fed) could cause inflation to surge back. As controversy grows over alleged “political pressure” surrounding a subpoena issued by the U.S. Department of Justice to Federal Reserve Chair Jerome Hayden Powell, a key Fed official has publicly drawn a line, saying that continuing down this path will lead to major turmoil.
In an interview on the program Squawk Box on Consumer News and Business Channel (CNBC) on the 15th (local time), President Goolsbee said, “Any attempt to infringe on or attack the independence of the central bank will cause major turmoil,” adding, “If you try to strip away that independence, inflation will come roaring back.” His remarks came just a few days after Chair Powell confirmed that he had received a subpoena from the U.S. Department of Justice in connection with renovation work at the Fed’s headquarters in Washington, D.C. The project is reported to be worth several billion dollars, and cost overruns have emerged as a central point of conflict between The White House and the Fed.
While avoiding a direct assessment of the legal case itself, President Goolsbee backed Powell’s concern that the controversy over the renovation could be used as a pretext to pressure the Fed on interest rates. “If investigations are being used as a justification simply because people disagree with interest rate decisions, that is a very serious problem,” he said. “We should not be in that kind of situation.”
Powell’s term as chair of the Fed ends in May this year, although he can remain as a member of the Board of Governors until 2028. As a result, market observers note that the question of whether Powell stays or goes is not just a personnel matter, but could simultaneously influence the Fed’s future policy direction and intensify the debate over its independence.
Goolsbee, meanwhile, has a background in Democratic Party circles prior to taking over as president of the Federal Reserve Bank of Chicago in December 2022. He served as chair of the Council of Economic Advisers in the Obama administration and acted as an adviser to the Biden presidential campaign in 2020.




pride@fnnews.com Special Correspondent Lee Byung-chul Reporter