Federal Reserve Goolsbee: Government financing costs should not be taken into account when formulating policy

The Federal Reserve said on Friday that central banks should not take into account government funding costs when setting interest rate policy, citing this as a key reason why the Fed's independence is crucial. "It pains me that people should have the audacity to say... why do a bunch of people outside the government, outside the executive branch, decide interest rates? They shouldn't be independent," Mr. Goolsby said at the Chicago Fed Economic Symposium. "There's even been talk of the Fed cutting interest rates to reduce the cost of government borrowing. That's effectively monetizing debt. That's the fundamental reason we want the Fed to remain independent." President Donald Trump has said the Fed should cut interest rates to reduce the government's borrowing costs.