The controversy over the renovation of the headquarters has sparked factions within the administration looking to challenge the independence of the Federal Reserve (Fed).

While some economic advisors defend the Fed's independence, there remains a group seeking to remove Chair Jerome Powell through legal means, reflecting internal tensions related to monetary policy and public spending.

MAIN CONTENT

  • The upgrade of the Fed headquarters highlights the debate about the independence of this agency in the Trump administration.

  • Fed Chair Powell opposes a major renovation due to the historical significance and complexity, asserting that no one wants to undertake it during their term.

  • The interest rate reduction policy aimed at lowering public debt costs is being pushed, but the Fed still maintains that inflation stability is the top priority.

How does the renovation of the Fed headquarters affect the independence of this agency?

Information from Jinshi indicates that the debate over the headquarters renovation has provided an opportunity for factions within the Donald Trump administration to challenge the Fed's independence. Some advisors still defend this independence, but there are many voices calling for changes in Fed leadership to serve the administration's policy goals.

"No one wants to undertake a major renovation of a historic building during their term, especially when there are two buildings needing complex repairs." – Jerome Powell, Fed Chair, in testimony June 2023.

Jerome Powell, Fed Chair, 6/2023

Why is the interest rate reduction policy being promoted in the context of rising public debt?

The Trump administration wanted to reduce borrowing costs by lowering interest rates to manage the increasing debt burden caused by tax-cut policies that expanded deficits. Chair Powell acknowledged that the Fed might cut interest rates this year if inflation decreases or the labor market weakens, but at the same time emphasized that the Fed's role is to maintain stable inflation to uphold trust in the currency.

How does the Fed respond to policy pressures from the administration?

Central banks in developed economies often resist pressure to lower interest rates to maintain monetary stability. Powell and the Fed pursue stable inflation as an absolute priority, avoiding major risks to the macroeconomy despite political pressure from the administration seeking short-term benefits.

"No major central bank accepts political pressure that undermines its independence, as it would lead to prolonged loss of trust in the market and the economy." – Jamie Dimon, CEO of JPMorgan Chase, 2022.

Jamie Dimon, CEO of JPMorgan Chase, 2022

What are the key factors influencing the Fed's interest rate policy decisions?

The Fed considers many factors, including actual inflation trends and the labor market situation. Political tensions may create pressure, but specific economic data serves as the main decision basis. Maintaining market trust and monetary stability is always prioritized.

How does the history and special significance of the Fed headquarters affect the renovation decision?

The Fed headquarters has significant historical value, and any repairs require high caution. Powell asserts that no one in the administration wants to take on a major renovation due to its complexity and impact on the Fed's image. This factor shifts internal conflicts and related policies.

Comparison table of responses among advisors in the administration regarding the headquarters renovation and interest rate policy

Characteristics Supporters of Fed independence Group wanting to change Fed leadership Views on headquarters renovation Oppose major renovations during the term, maintaining historical status See renovation as a tool to exert pressure and change Interest rate policy Emphasize inflation stability, do not rush to lower rates Want to quickly lower rates to reduce public debt costs Fed leadership approach Support Jerome Powell remaining as chair Seeking to remove Powell through legal measures

Frequently Asked Questions

1. How important is the renovation of the Fed headquarters?
The headquarters is a historical heritage, and repairs need to be cautious so as not to affect the long-term value and reputation of the Fed.

2. Why is there a group of advisors wanting to change Fed leadership?
Some groups believe that changing leadership will help promote monetary policy more aligned with the administration's debt cost goals.

3. Is the Fed easily able to lower interest rates when requested by the administration?
The Fed must rely on economic data and prioritize inflation stability, not just depend on political pressure.

4. What does inflation stability mean for the U.S. economy?
Inflation stability helps maintain trust in the currency, encourages investment, and fosters sustainable economic growth.

5. How does the Fed's interest rate policy affect public debt costs?
Low interest rates reduce debt repayment costs; however, overly lowering rates can pose long-term inflation risks.

Source: https://tintucbitcoin.com/fed-khong-ha-lai-suat-thang-nay/

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