Chicago Fed President Austan Goolsbee strongly defended the central bank’s independence in remarks to CNBC, warning that undermining the Fed’s autonomy could have serious long-term economic consequences.

He emphasized that maintaining credibility around the Fed’s 2% inflation target depends on its ability to act free from political pressure.

“When there is interference over the long run,” Goolsbee said, “it’s going to mean higher inflation, worse growth, and higher unemployment, because there’s just going to be “a little less willingness to step up and do the hard things when the moment is tough”.

Goolsbee, who joined the Fed over two years ago, stressed that the economic consensus is overwhelmingly in favor of central bank independence. He pointed to global examples where the lack of such independence has led to significantly worse outcomes—higher inflation, weaker growth, and elevated unemployment.

His remarks come amid heightened concerns over potential political pressure from the White House, as reports circulate about President Trump exploring legal avenues to remove Fed Chair Jerome Powell.

In an interview with Fox Business New York Fed President John Williams said monetary policy is “well positioned”. “I don’t see any need to change the setting of the fed funds rate anytime soon,” he added.

He expected US growth to dip below 1% this year, accompanied by a rise in the unemployment rate to between 4.5% and 5%, as the impact of President Trump’s import tax hikes filters through the economy.

Williams emphasized that this slower pace of expansion should not be mistaken for a recession. “That’s just a slower outlook, slower growth than you’ve seen in the past couple years,” he noted.

He stressed the importance of ensuring that these one-off cost increases from tariffs do not become embedded in broader inflation trends.

In a speech overnight, Fed Chair Jerome Powell pointed to substantial changes underway, by US administration, in trade, immigration, fiscal policy, and regulation—all of which are still “evolving” and difficult to assess in terms of economic impact.

In particular, Powell acknowledged that the scale of tariff increases already announced is “significantly larger than anticipated,” and warned that the resulting economic effects will likely include “higher inflation and slower growth.”

Powell noted a clear rise in near-term inflation expectations, with both market-based breakevens and survey indicators moving up in response to the new tariff regime. While long-term expectations remain largely anchored, he cautioned that the inflationary impulse from tariffs could prove “more persistent” than initially thought. In the near term, tariffs are highly likely to generate “at least a temporary rise in inflation” .

Importantly, Powell acknowledged that Fed could face a scenario where its “dual-mandate goals are in tension.” In such a case, policymakers would need to carefully weigh how far the economy is from each objective, and over what time horizons those gaps might close.

Full speech of Fed’s Powell here.