Chicago Fed President supports Powell, emphasizes Fed's independence and neutral stance.

The issue of the independence of the Federal Reserve has once again become a focus of attention in the American political and market arena. Chicago Fed President Gulspie expressed firm support for Fed Chairman Powell in a media interview on Friday, emphasizing the critical importance of central bank independence to the economy. He stated that Powell is a person of "integrity," and that "almost all economists agree that the central bank should be independent of political interference, otherwise it will have adverse effects on inflation, growth, and the job market." Gulspie's statement comes at a time when pressure from Trump and his allies on Powell is intensifying. Trump criticized Powell for being "too cautious" in interest rate policy, expressing dissatisfaction with his "wait-and-see" approach and concerns about the inflation risks posed by tariffs. There have even been rumors recently that Trump intends to dismiss Powell, although he himself has denied this, but has not completely ruled out the possibility. In the interview, Gulspie emphasized, "In countries where central banks lack independence, inflation tends to be higher, economic growth weaker, and unemployment more severe." He bluntly stated, "When I hear people discussing whether the Fed's independence should be revoked, I feel very distressed, because such discussions will only bring negative consequences." In addition to political pressure, Powell is also facing a new round of questioning from the Trump camp. White House officials brought up the Fed's $2.5 billion headquarters renovation project, questioning whether Powell accurately explained the purpose of the funds in his congressional testimony, intending to undermine his credibility. Although Gulspie did not directly respond to these criticisms, he called Powell a "Hall of Fame level" chairman, emphasizing his dedication and integrity, intending to support Powell. On interest rate policy, Gulspie maintains a consistent stance with Powell, advocating to "wait for the data." He pointed out that while tariffs are pushing up commodity prices, this has not yet spread to service sector prices, leaving us still in a wait-and-see mode. He added that the Trump administration's "rolling, phased" tariff strategy has made evaluating its inflation impact more complex. "This is not like a one-time price spike, but a continuous 'drip effects,' which will only delay our confirmation of when we will return to the 2% inflation target, thus postponing the timing of interest rate cuts." When asked if he supports a rate cut this autumn, Gulspie said that if inflation data remains moderate in the coming months, he will be more confident in taking rate cut measures. But if tariffs continue to push prices up, he will reassess his policy position. In contrast to Gulspie's "cautious wait-and-see" position, Fed Governor Waller is more inclined to cut rates as soon as possible. He stated on Thursday that he supports a rate cut at the July 30-31 meeting and hinted that if most officials decide to hold, he may vote against it. Waller emphasized that the inflation caused by tariffs is mostly "one-time," and more attention should be paid to supporting the labor market. He pointed out in an interview with Bloomberg TV, "Although frequent dissension is not a good thing, if you strongly believe that a rate cut should be made at this critical juncture, you must express it clearly." Waller's statement has pushed up market expectations for rate cuts, benefiting gold. Since gold does not generate interest income, it is usually more attractive in a period of declining interest rates. Spot gold rose by 0.35% to $1,350.46 per ounce. Meanwhile, U.S. Treasury yields and the dollar have fallen in sync, reflecting an increasing market expectation of a policy shift by the Federal Reserve later this year. Although the derivatives market currently sees almost zero probability of a rate cut at the July meeting, the expected cumulative rate cut for the year is about 45 basis points, slightly lower than the 65 basis points at the beginning of the month, mainly due to the strong job data released on July 3. Data released by the University of Michigan on Friday showed that consumers expect an inflation rate of 4.4% in the next year, a decrease from 5% last month, the lowest since February, but still above the Fed's target of 2%. This data further confirms the "ambiguity" of the inflation path and is an important reason for the differences within the Federal Reserve on whether to cut rates.