Goolsbee on Tariffs, Monetary Independence, and the Fed's Role

Austan Goolsbee, president of the Chicago Federal Reserve Bank, was interviewed on "Face the Nation with Margaret Brennan" on April 20, 2025. The interview began with a discussion of President Trump's tariff plans.

Goolsbee was asked about Federal Reserve Chairman Jerome Powell's assessment that tariff increases would lead to higher inflation and slower growth. Goolsbee responded that business leaders in the Chicago Fed district had expressed concerns about the potential impact of tariffs on their operations. He noted that the tariff announcement on April 2nd was larger than anticipated, and there were many uncertainties about the future of the tariffs.

The conversation then turned to the impact of tariffs on consumer behavior. Gary Cohn, a former economic advisor, had noted that consumers might be rushing to purchase goods before tariffs take effect. Goolsbee agreed that preemptive purchasing was likely more pronounced on the business side, particularly in the auto sector. He mentioned that businesses were building up inventories in anticipation of tariffs, which could lead to artificially high activity initially, followed by a potential slowdown later.

The interview also touched on President Trump's reaction to Powell's remarks on tariffs. Trump had expressed dissatisfaction with Powell and suggested he could remove him from his position. Goolsbee was asked if such statements undermined the Fed's apolitical role. He emphasized the importance of monetary independence from political interference for the Fed to effectively do its job. He stated that economists widely agree that monetary independence is crucial, as countries without it often experience higher inflation, slower growth, and worse job markets. Goolsbee expressed his hope that monetary independence would not be questioned, as it would undermine the Fed's credibility.