Chicago Fed President Austan Goolsbee has voiced serious concerns over President Donald Trump's recent remarks about removing Federal Reserve Chair Jerome Powell.
What Happened: Trump's comments, made following Powell's speech at the Economic Club of Chicago, reignited a long-standing debate over the President's power to remove Federal Reserve leaders.
Goolsbee warned that such an action could severely undermine the credibility of the U.S. central bank, with far-reaching consequences for economic stability, as reported by Fortune on Monday.
Trump has repeatedly criticized Powell for not cutting interest rates quickly enough in response to economic conditions, particularly following his controversial tariff policies.
Powell has argued that the tariff increases announced by Trump have significantly impacted inflation and economic growth, which led to his warnings.
Trump has blamed Powell for not acting swiftly enough to ease interest rates, which he believes are necessary to counter the negative economic effects of his policies.
This conflict has drawn attention. Goolsbee, echoing the concerns of many economists, cautioned that removing Powell could set a dangerous precedent that could erode trust in the Fed.
"I strongly hope that we do not move ourselves into an environment where monetary independence is questioned," Goolsbee stated, highlighting the importance of keeping the Federal Reserve free from political influence.
Why It Matters: Trump’s criticism of Powell and his intention to terminate him have been a topic of concern for some time. Trump lashed out at Powell for the Federal Reserve’s reluctance to cut interest rates.
This was followed by Senator Elizabeth Warren’s warning about a potential stock market collapse if Trump decides to fire Powell.
Investment strategists have also warned that Trump’s potential attempt to dismiss Powell could rattle U.S. financial markets and undermine central bank independence. Furthermore, White House National Economic Council chair Kevin Hassett confirmed that the Trump administration is exploring ways to remove Powell, adding to the uncertainty.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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