WASHINGTON, Sept 21 (Reuters) – Suggestions that the Federal Reserve could lower borrowing costs to help the US government finance its current debt and deficits are the very reason the central bank needs to be independent in setting monetary policy, Chicago Fed President Austan Goolsbee said on Monday.
Fiscal policy and deficit levels need to be treated as “the background weather” by the Fed, relevant to the degree that they influence inflation, but otherwise are a matter for elected officials to decide, Goolsbee told reporters at an event in London.
“Should the Fed try to reduce the rates to make the deficit smaller or to make it less costly to increase the debt?” Goolsbee asked. “Let’s be a little careful with…