The White House is discussing the issue of granting independence to the Federal Reserve in conducting monetary policy. The Biden administration thinks this issue is high on the agenda in the presidential campaign this year.
Joe Biden’s allies made a statement on the importance of an independent US central bank at the White House Council of Economic Advisers. Experts highlighted the historical correlation between government interference in domestic monetary policy and economic underperformance.
These remarks came after recent claims by representatives of ex-President Donald Trump, which could undermine the Federal Reserve’s autonomy and cause turmoil on Wall Street. Among these mad ideas are the hypothetic dismissal of Federal Reserve Chairman Jerome Powell and the interference of a president in monetary policy, particularly in setting the official funds rate.
Experts believe these ideas would resonate with a wide audience: politically engaged citizens, hesitating voters, and Wall Street bankers. Some analysts view these proposals as a veiled message to market participants that a second term for Donald Trump may not necessarily lead to a strong rally in the stock market as it happened in 2017–2019. Additionally, other campaign proposals by Trump include the deportation of migrants, devaluation, tariff hikes, and "bringing the Federal Reserve to its knees."
