Chairman of the Chicago Federal Reserve, Auston Gulasbi.
Kate Roney | CNBC
Federal Reserve Bank of Chicago President Auston Gulasbi on Monday urged against reducing the independence of the Central Bank as President Donald Trump criticized Chair Jerome Powell.
“Long lasting expectations that Fed would get back to 2% target, were severely important. Fed freedom is severely important,” Gulasbi said on CNBC’s “Squalk Box”.
“When prolonged intervention occurs, it means high inflation, it means that it means worse growth and high unemployment, because when Trump has said, he only has a little less desire to do less work and hard work to take steps.”
Trump put another salvo in Powell on Friday to not reduce the interest rates. It has also been talked about that Trump can try to pull wires on monetary policy by law and possibly by establishing a “shadow president” that can weaken the authority of Powell.
Trump said, “If we had a fed chairman who understood what he was doing, the interest rates would also be low,” Trump said, pointing to examples of falling prices. “He must bring them [interest rates] Below.”
White House Economic Advisor Kevin Haset said on Friday that Trump and his team are assessing if they can remove the Fed chair. Powell has earlier stated that he cannot be evacuated under the law and intends to serve until the end of his term in May 2026.
“I have been in the fed for more than two years. Before I was in the fed, I will tell you, economists are basically unanimous that Fed Freedom is seriously important,” said Gulsbi. “And to see that, just look at countries where they have not been given freedom. Inflation is high, unemployment is high, development is worse.”
