Fed Independence Under Threat as Political Pressure Mounts

Austan Goolsbee, President of the Chicago Fed, issued a stark warning against undermining central bank independence, asserting that such actions WOULD inevitably reignite inflation. "Anything that’s infringing or attacking the independence of the central bank is a mess," Goolsbee declared. "You’re going to get inflation come roaring back if you try to take away the independence of the central bank."

The remarks followed Fed Chair Jerome Powell’s disclosure of a Justice Department subpoena tied to an investigation into the renovation of the Fed’s headquarters—a case Powell has labeled as illegal. Goolsbee echoed Powell’s concerns that the probe could be a pretext for political interference in rate policy, particularly from former President Donald Trump. "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 has relentlessly criticized Powell, demanding deeper rate cuts and dubbing him "Too Late"—despite three rate reductions since September 2025. With Powell’s term as chair ending in May, the escalating pressure raises questions about the Fed’s ability to operate free from political coercion.