#美联储独立性

How much longer can the Federal Reserve remain 'independent'?

Recently, the Federal Reserve has once again come under intense scrutiny. After Trump regained power, he repeatedly called for the Federal Reserve to cut interest rates, even criticizing Powell, saying 'the sooner he leaves, the better.' Behind this is the fierce clash between the independence of the Federal Reserve and political interference.

Since its establishment in 1913, the Federal Reserve has relied on the independence of monetary policy as its foundation, with a decision-making mechanism that isolates it from short-term political pressure, ensuring that interest rate policies serve long-term economic stability. However, today, political interference in the Federal Reserve has become increasingly apparent. Historically, both the Johnson and Nixon administrations pressured the Federal Reserve Chair to maintain low interest rates, disregarding price stability, which ultimately led to high inflation. Now, Trump is continuously demanding the Federal Reserve to cut interest rates to stimulate the economy and increase his chances of re-election, which undoubtedly challenges the independence of the Federal Reserve.

From an economic perspective, if the Federal Reserve succumbs to political pressure and adjusts interest rates arbitrarily, it will hinder the flexibility of monetary policy to respond to economic data, undermining economic stability. For instance, cutting interest rates during high inflation will further drive up prices and disrupt economic order. From the perspective of financial markets, once the Federal Reserve loses its independence, public confidence in it will significantly diminish, triggering severe volatility in the financial markets, with investors potentially selling off dollar assets in large quantities and shifting to safe-haven assets.

Currently, the international situation is complex, with ongoing conflicts in Ukraine and Israel-Palestine, and global economic uncertainty. As one of the most important central banks in the world, the policies of the Federal Reserve have far-reaching implications. If its independence is compromised, global financial markets will be impacted, and the debt risks of emerging market countries will also intensify.

Whether the Federal Reserve can maintain its independence is crucial for the stability of the U.S. and even the global economy and finance. In today's environment of increasing political pressure, this issue deserves our continued attention.