SquawkPod: Inflation, Fed Independence, and Geopolitics - January 15, 2026

Geopolitical Tensions and Iran

• 🌍 The episode begins with a discussion of deadly protests in Iran and the potential for US involvement, with former White House advisor Dan Senor highlighting the high stakes for the global region.
• ⚠️ Senor argues that without US support in a kinetic sense for the protests, the Iranian regime has a chance of surviving, despite being at its weakest point in its 47-year history.
• 📈 Economic conditions in Iran are described as unsustainable, with high inflation, but the regime's security forces provide staying power, unlike the Soviet Union in 1989.
• 🇺🇸 Trump's foreign policy approach is characterized as using American power abroad for America First interests, citing actions like the Soleimani strike and Abraham Accords, and avoiding "forever wars."

Federal Reserve Independence Under Scrutiny

• 🏛️ The core of the discussion revolves around President Trump's quest to replace Fed Chair Jay Powell and influence the central bank's work, amidst a DOJ criminal investigation into Powell.
• 🗣️ There's a strong consensus that central bank independence is crucial for economic stability, with many business leaders and former officials emphasizing its importance.
• 📉 The market has largely ruled out a Fed rate cut before Powell leaves, with expectations shifting to a new chair implementing cuts, and potential candidates like Kevin Worsh being seen as less dovish than Kevin Hassett.
• ⚠️ Chicago Fed President Austan Goolsbee warns that attacking Fed independence is a "festering stink bomb" on the path to 2% inflation and that countries with criminal investigations into their central banks are not advanced economies.

Economic Outlook and Inflation

• 📊 The latest jobless claims report shows a lower-than-expected number (198,000), indicating continued strength and stability in the labor market, not a rapid cooling.
• 📈 Goolsbee believes the labor market is cooling at a slow rate and that consumer spending, rooted in income growth, is the primary driver of the economy, not AI.
• 🎯 The primary focus for the Fed remains getting inflation back to 2%, with Goolsbee acknowledging that the Fed moved too slowly initially and that non-housing services inflation is still a concern.
• 📉 While Goolsbee expects rates to be lower by the end of the year, he stresses the need for convincing evidence of a return to 2% inflation before significant rate cuts can occur.

Accountability and Oversight

• 🧐 The debate touches on accountability, with the idea that while agencies should be held accountable, this should be separate from interfering with their independence or using it as a pretext for policy disagreements.
• 🔍 Audits of the Fed system exist, but Goolsbee argues against direct coercive control of the Fed's budget due to policy differences, deeming it dangerous.
• 🏦 Bank of America CEO Brian Moynihan also highlighted the importance of an independent Fed for the US economy and cautioned against capping credit card rates, which could reduce credit availability.