A top Federal Reserve official defended the independence of the central bank on April 20, responding to President Donald Trump’s steady drumbeat of political pressure on the agency.An interviewer on the CBS News program “Face the Nation” invoked a recent Trump critique of Fed Chair Jerome Powell. In a social media post, Trump wrote, “Powell’s termination cannot come fast enough!”The interviewer then asked Austan Goolsbee, president of the Federal Reserve Bank of Chicago, if such statements undermine the Fed’s role as an apolitical institution.“I strongly hope that we do not move ourselves into an environment where monetary independence is questioned,” Goolsbee replied. “Because that would undermine the credibility of the Fed.”Trump has repeatedly attacked Powell and the Fed, urging the central bankers to lower interest rates, questioning their abilities and implying that he could do a better job.Financial turmoil has both Trump and Powell under duressTrump’s tariff campaign, announced earlier this month, continues to rattle global financial markets. Many consumers expect inflation to spike, and recession fears are rising, a scenario that puts both Trump and Powell under duress.Their latest exchange came just days before the “Face the Nation” broadcast.In an April 16 speech, Powell telegraphed that the Fed is in no hurry to lower interest rates, a move that might boost the economy, because of market uncertainties.“For the time being, we are well-positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said.In response, posting on Truth Social the next day, Trump seemed to urge Powell’s firing.At a White House event on April 17, Trump continued his attack on Powell, saying, “I’m not happy with him… If I want him out, he’ll be out of there real fast, believe me.”FILE PHOTO: U.S. President Donald Trump looks on as Jerome Powell, his nominee to lead the U.S. Federal Reserve, speaks at the White House in Washington, U.S., November 2, 2017.Can Trump fire Fed Chair Powell?The Federal Reserve is charged with promoting full employment and stable prices. It is designed to operate independently of Congress and the White House, even if politicians don’t like the Fed’s decisions.The reason for the independence, the Brookings Institution explains, is that politicians tend to want lower interest rates because lower rates stimulate the economy. The problem with that stance: Lowering interest rates can also trigger inflation, potentially destabilizing the economy.“There’s virtual unanimity among economists that monetary independence from political interference — that the Fed or any central bank be able to do the job that it needs to do — is really important,” Goolsbee said on “Face the Nation.”Trump appointed Powell in his first term. He probably cannot legally fire the Fed chair over policy differences, a point Powell made himself in his April 16 appearance.“Our independence is a matter of law,” Powell said.This article originally appeared on USA TODAY: Chicago Fed Chief warns: Central bank must be independent of Trump
