The Fed Shouldn’t Take the Political Bait
The central bank can’t win a fight with the White House, but it can and should do a better job explaining its role.
Still independent.
Photographer: Al Drago/Bloomberg
President Donald Trump’s attempt to remove Lisa Cook as a governor of the Federal Reserve is a brazen escalation of the administration’s long-running pressure campaign on the central bank. It is also a frontal assault on the Fed’s independence — and the question is how the Fed can take action to shield itself from political influence.
The Fed can start by being more specific about what independence means. Without invoking the term, Chair Jerome Powell provided a good working definition in his speech at Jackson Hole last week: Members of the Federal Open Market Committee make decisions about monetary policy “based solely on their assessment of the data and its implications for the economic outlook and the balance of risks,” he said. “We will never deviate from that approach.”