Fed’s Goolsbee Warns Inflation Will ‘Come Roaring Back’ if Fed Loses Independence

Chicago Federal Reserve President Austan Goolsbee warned that undermining the Fed’s independence could carry serious economic consequences amid a Justice Department probe into Fed Chair Jerome Powell over the central bank’s $2.5 billion renovation of its Washington, D.C., headquarters.

“Anything that’s infringing or attacking the independence of the central bank is a mess,” Goolsbee told CNBC’s “Squawk Box” on Thursday. “You’re going to get inflation come roaring back if you try to take away the independence of the central bank.”

Goolsbee Backs Powell on DOJ Probe

Goolsbee echoed Powell’s accusation that the DOJ investigation served as a “pretext” for the Fed’s interest rate decisions. In a statement released earlier this week, Powell framed the investigation as a consequence of not adhering to President Trump’s calls for lower rates.

Goolsbee added that other countries, such as Zimbabwe, Russia, and Turkey, have launched investigations into their central banks before, although these countries are not “advanced economies.” The investigation has received heavy pushback from several economic leaders across the globe, including every living former Fed Chair, European Central Bank Chair Christine Lagarde, and 10 foreign central bank governors.

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