The Federal Reserve
Attempts to Curb the Central Bank's Independence
The Federal Reserve (Fed) is more independent from Congress and the president than most agencies are. Theory and evidence support the view that independence facilitates a less political, longer-term perspective to monetary policymaking that generally leads to better long-run economic outcomes, such as lower inflation. The trade-off is less congressional and executive input into and oversight of its actions. President Donald Trump has taken multiple steps that seek to reduce the Fed’s independence. Sources of Independence The Fed operates solely under the authority granted by Congress, which gave the Fed some structural characteristics that contribute to its independence. The Fed…
