Source: EconLog
by Jon Murphy
“Lately, President Trump has been pressuring Federal Reserve chairman Jerome Powell to cut interest rates. This has set off concerns about Federal Reserve independence. And reasonably so. Generally speaking, the more independent the central bank is from political pressure, the better the country’s economy performs on monetary measures like inflation (interested readers can find a survey of the literature here). Indeed, the Banking Act of 1935 significantly changed the Federal Reserve’s structure to make it more independent from the Executive branch, and Congress in general. To be fair, Trump isn’t the only one trying to reduce Federal Reserve independence. Libertarian-leaning folks also call for reduced Fed independence with slogans like ‘Audit the Fed!’ But how much influence would an individual president have over Federal Reserve monetary policy? Probably not much.” (07/17/25)
https://www.econlib.org/interest-rate-cuts-and-federal-reserve-independence