Austan Goolsbee, president of the Chicago Fed, said on Thursday that trying to weaken the Fed’s independence would bring inflation roaring back.
“Anything that’s infringing or attacking the independence of the central bank is a mess,” Goolsbee said. “You’re going to get inflation come roaring back if you try to take away the independence of the central bank.”
Goolsbee’s warning, of course, came right after Jerome Powell, the Fed chair, confirmed that the Justice Department had served him a subpoena in what he calls an illegal case involving the massive renovation of the Fed’s headquarters in Washington, D.C.
The Chicago Fed president backed Powell’s recent statement that this whole thing could be a pretext for Donald Trump to influence rate policy.
Trump pushes Powell while legal heat builds
“I agree with it, with his argument that if you’re investigating as a pretext because you disagree with the rate decisions, that’s a mess,” Goolsbee said. “We should not be in that place.”
Trump’s pressure on Powell hasn’t let up. He’s slammed him with insults and called for much lower rates. He even gave Powell a nickname: “Too Late.”
All this while the Fed has already cut its main interest rate three times since September 2025. But that hasn’t been enough for Trump. He wants more. And now he’s going after Powell with the full weight of the federal government.
Powell’s time as chair ends in May, but he can stick around as a Fed governor until 2028 if he wants. Still, the attacks aren’t just about him. Goolsbee said this kind of thing isn’t normal in serious economies.
“I know that there have been countries that had criminal investigations of their central banks,” he said. “But those countries are Zimbabwe and Russia and Turkey and a bunch of places that you would not characterize as advanced economies.”
He’s not wrong. Once a central bank loses its independence, credibility goes with it. And once that’s gone, inflation usually follows.
Goolsbee has been around politics. Before joining the Chicago Fed in December 2022, he worked with Barack Obama and advised Joe Biden during his 2020 campaign. But on Thursday, he said none of that matters anymore. “Once you’ve become a sworn member of the Federal Reserve, you’re out of the elections business.”
He also didn’t hold back on praising Powell’s past work, calling him a “first-ballot Hall of Famer” for cutting down inflation without pushing the country into a recession.