Can Fed Independence Survive Donald Trump?
From schoolyard insults to an attempted firing, Trump has broken new ground in his pursuit of rate cuts. What does that mean for the future of the central bank?
Photo Illustration: Christian Capestany
The mandate of the US Federal Reserve is surprisingly clear when it comes to government agencies: achieve maximum employment while controlling prices. With a board of governors in Washington and regional branches to help gauge the nation’s economic health, the central bank has long prided itself on responding to data and not politics.
Economists agree central banks must be insulated to achieve long-term goals. While there’s the occasional White House grumbling, this concept has been accepted by US presidents. Unless of course that president is named Donald Trump, who’s used his bully pulpit in a literal sense, leveling insults and threats in a bid for rate cuts. On Aug. 25, Trump turbocharged this campaign by attempting to fire Fed Governor Lisa Cook. In this Bloomberg Originals mini-documentary Can the Fed Escape Trump’s Control?, we assess what’s fast becoming a historic moment for the world’s most important central bank—and whether it can weather the storm.