It started, as many modern political storms do, with a social media post.
On Truth Social, U.S. President Donald Trump publicly scolded Federal Reserve chair Jerome Powell, insisting that the next Fed chair must be someone who will βlower interest rates if the market is doing well.β Anyone who disagrees, he warned, βwill never be the Fed chairman.β
Why then was the Fed designed to ignore presidents?
Presidents live in election cycles and another election is always just around the corner. Growth feels good, voters are happy and nobody likes to be told the economy needs to slow down. An independent central bank acts as the "adult in the room," willing to raise interest rates to curb inflation, even if it makes the president or the public unhappy. That is why the Fed was made independent.
The most important protection is instrument independence, which is the authority to set interest rates without taking orders from the White House.
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