Independence of the Federal Reserve is essential, as it insulates monetary policy from short-term political pressures. Loretta Mester emphasizes the Fed's need to operate independently to manage the economy effectively, particularly given the time lag in monetary policy effects. President Trump has expressed frustration with Fed Chair Jerome Powell over interest rate decisions. Consumer prices have notably risen, complicating decisions on lowering interest rates. Firing Powell could jeopardize the Fed's independence, which has been a stability feature of the U.S. economy since the 1950s.
"Independence is one of the foundational elements of a well-run economy. The benefits of independence stem from the fact that the Fed and monetary policy affects the economy with a lag."
"The Fed has been wary of lowering interest rates as it assesses the impact of Trump's tariffs on inflation. Consumer prices are up 2.7% compared to a year ago, which is a larger annual increase than the month before."
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