Federal Reserve’s Goolsbee warns political interference fuels inflation

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, has been making the rounds with a message that’s simple, historically grounded, and deeply uncomfortable for anyone in Washington hoping to lean on the central bank: political interference with the Fed almost always ends in higher inflation. The independence argument, with receipts Goolsbee has been a vocal defender of Fed independence since taking the helm at the Chicago Fed in 2023. His argument isn’t ideological. It’s empirical. He’s repeatedly cited the example of Paul Volcker, the Fed chair who jacked interest rates to punishing levels in the early 1980s to crush runaway inflation. Volcker’s approach was brutal. Unemployment surged, businesses shuttered, and the political establishment was furious. But it worked. Inflation fell from double digits to manageable levels, setting up decades of relative price stability. Goolsbee’s point: that kind of painful but necessary medicine only gets prescribed when the central bank can operate without worrying about the next election cycle. In an April 2025 interview, Goolsbee laid this out plainly, warning that sustained political interference could produce “higher inflatio...