[Gary Gensler] Will the Fed be allowed to do its job?

As candidates vie to become the next chair of the US Federal Reserve, they should heed the hockey legend Wayne Gretzky’s advice to “skate to where the puck is going, not where it has been.” With many economic pucks in play — from sticky inflation, mounting deficits, and an AI investment boom to potential financial fragility and concerns about the dollar’s global primacy — a big question for the global economy is whether the Fed will be allowed to do what it needs to do. Will it maintain enough autonomy and credibility to promote stable prices, maximum employment, and financial stability when politics, increasing debt, and market exuberance could be heading the other way?

Congress designed the Fed to make expert judgments in the public interest, free from political influence and pressure. But President Donald Trump’s second administration has something else in mind. Some may say there is “no need to worry,” that the Supreme Court will protect Fed independence by finding a way to distinguish it from other agencies over which the president has asserted a right to remove “principal” officers at will. Regardless of the outcome of litigation over the attempt to remove Fed Governor Lisa Cook, though, the central bank’s independence already has been significantly impaired.

For example, Trump has asserted that all interpretations of law and review of agency expenditures, including by the Fed, fall within the purview of the White House and Justice Department.