Goolsbee on Cutting Interest Rates: Federal Reserve Independence from Political Interference Is ‘Critically Important’

BURNETT Yeah So what ░░░░░░░░ You know if you ░░░░░░░░ Chinese goods I was ░░░░░░░░ you know if he ░░░░░░░░ what he says he ░░░░░░░░ going to do on ░░░░░░░░ you re going to ░░░░░░░░ something that was 10 ░░░░░░░░ week ago coming from ░░░░░░░░ be 18 50 I ░░░░░░░░ Austan how long are ░░░░░░░░ s two ways to ░░░░░░░░ this question One is ░░░░░░░░ fast does that cause ░░░░░░░░ pain The other is ░░░░░░░░ long can the United ░░░░░░░░ sustain that real pain ░░░░░░░░ Yeah those are two ░░░░░░░░ questions each of which ░░░░░░░░ centrally important But I ░░░░░░░░ the the way I ░░░░░░░░ is imported goods in ░░░░░░░░ United States are only ░░░░░░░░ percent of GDP So ░░░░░░░░ is a sense in ░░░░░░░░ if tariffs kind of ░░░░░░░░ in their lane they ░░░░░░░░ t be as big ░░░░░░░░ as people fear Where ░░░░░░░░ fears come about are ░░░░░░░░ it jumps out of ░░░░░░░░ 11 percent lane and ░░░░░░░░ would happen if there ░░░░░░░░ immediate retaliation if the ░░░░░░░░ are on things that ░░░░░░░░ parts components and supplies ░░░░░░░░ other things that are ░░░░░░░░ manufactured domestically of which ░░░░░░░░ lot of what would ░░░░░░░░ coming from China would ░░░░░░░░ So it wouldn t ░░░░░░░░ be consumer goods that ░░░░░░░░ re buying toys or ░░░░░░░░ on Amazon it would ░░░░░░░░ parts components that are ░░░░░░░░ into automobiles or or ░░░░░░░░ or things where consumers ░░░░░░░░ going to feel it ░░░░░░░░ And then if it ░░░░░░░░ our confidence that the ░░░░░░░░ is erupting into a ░░░░░░░░ trade war you re ░░░░░░░░ to see people change ░░░░░░░░ behavior People spend less ░░░░░░░░ businesses invest less If ░░░░░░░░ is a path to ░░░░░░░░ Secretary Bessent called the ░░░░░░░░ age of trade that ░░░░░░░░ could sign some new ░░░░░░░░ and that we don ░░░░░░░░ actually put 100 percent ░░░░░░░░ tariffs on each other ░░░░░░░░ it would in the ░░░░░░░░ not probably have this ░░░░░░░░ impact And we might ░░░░░░░░ looking back and say ░░░░░░░░ it worked out fine ░░░░░░░░ until we get to ░░░░░░░░ some of those deals ░░░░░░░░ s just really throwing ░░░░░░░░ lot of dust in ░░░░░░░░ air BURNETT All right ░░░░░░░░ so you know look ░░░░░░░░ re more sanguine than ░░░░░░░░ and than many might ░░░░░░░░ May I ask you ░░░░░░░░ you know Trump came ░░░░░░░░ and said on social ░░░░░░░░ of Jerome Powell obviously ░░░░░░░░ know head of the ░░░░░░░░ and you re going ░░░░░░░░ be voting on interest ░░░░░░░░ This would be a ░░░░░░░░ time for Fed Chairman ░░░░░░░░ Powell to cut interest ░░░░░░░░ He s always late ░░░░░░░░ he can now change ░░░░░░░░ image and quickly cut ░░░░░░░░ rates Jerome and stop ░░░░░░░░ politics He put that ░░░░░░░░ part in all caps ░░░░░░░░ s your response to ░░░░░░░░ I mean are do ░░░░░░░░ think a rate cut ░░░░░░░░ warranted right now Put ░░░░░░░░ the tone and the ░░░░░░░░ he s doing it ░░░░░░░░ the pressure and all ░░░░░░░░ that is it the ░░░░░░░░ thing to do GOOLSBEE ░░░░░░░░ I think two things ░░░░░░░░ I m a huge ░░░░░░░░ of Jerome Powell as ░░░░░░░░ Fed chair I think ░░░░░░░░ s a first ballot ░░░░░░░░ of Famer in anyone ░░░░░░░░ book And I think ░░░░░░░░ Fed independence from political ░░░░░░░░ is critically important And ░░░░░░░░ virtual unanimity among economists ░░░░░░░░ that monetary independence remain ░░░░░░░░ you just look at ░░░░░░░░ where they don t ░░░░░░░░ it inflation is higher ░░░░░░░░ is slower the unemployment ░░░░░░░░ is higher the economic ░░░░░░░░ are worse If you ░░░░░░░░ say what should the ░░░░░░░░ do in response to ░░░░░░░░ to other policies to ░░░░░░░░ The answer is it ░░░░░░░░ on conditions As you ░░░░░░░░ Erin the law gives ░░░░░░░░ Fed the job when ░░░░░░░░ monetary policy stabilize prices ░░░░░░░░ maximize employment It s ░░░░░░░░ simple idea It s ░░░░░░░░ always easy to carry ░░░░░░░░ but our job is ░░░░░░░░ look at the hard ░░░░░░░░ And if we have ░░░░░░░░ that s both deteriorating ░░░░░░░░ growth and driving up ░░░░░░░░ prices that is to ░░░░░░░░ something that is stagflationary ░░░░░░░░ s not a generic ░░░░░░░░ to what the Fed ░░░░░░░░ do in response to ░░░░░░░░ Depends how much it ░░░░░░░░ up prices how long ░░░░░░░░ s going to last ░░░░░░░░ how much it reduces ░░░░░░░░ BURNETT Yeah And of ░░░░░░░░ that s that s ░░░░░░░░ all of this would ░░░░░░░░ lead you down that ░░░░░░░░ depending right how long ░░░░░░░░ how high Thank you ░░░░░░░░ Goolsbee so much Appreciate ░░░░░░░░ time GOOLSBEE Great to ░░░░░░░░ you again BURNETT Voting ░░░░░░░░ of the Federal Reserve ░░░░░░░░ interest rates there from ░░░░░░░░