Goolsbee Rejects Rate Cuts for U.S. Debt Relief, Cites Inflation Risks

Chicago Federal Reserve President Austan Goolsbee rejected calls to cut interest rates for U.S. debt relief, saying it would undermine the case for an independent central bank.

Goolsbee emphasized that the Fed will only consider deficits in its policy to the extent that they affect inflation, not to ease government debt financing.

He warned that cutting rates to reduce the cost of financing government debt amounts to monetizing the debt, which many economists view as inflationary and potentially self-defeating.

The comments come as President Donald Trump has been pushing for a policy rate near 1%, down from the current 3.75%-4.00% range, to better reflect the U.S. position as the world's most trustworthy borrower.