The Federal Reserve Faces a "Century Trial" on Independence: Credibility Hangs in the Balance

Odaily News This week, the Federal Reserve will face its most severe test of independence in its century-long history. This is not just about the fate of a single official; it will determine whether the Fed becomes the "private garden" of the U.S. President. The case revolves around former President Trump's attempt to dismiss Federal Reserve Governor Lisa Cook, citing her alleged involvement in mortgage fraud. In an extreme scenario, this case could erode the cherished independence of the Fed. Even if it doesn't reach that point, it could provide the first "operational guide" for how a president might remove someone from this heavily protected central bank governing body. Dismissing a Federal Reserve Governor is supposed to be difficult, a principle reflected in the "for cause" requirement and the 14-year term, although few serve that long. Monetary policy decisions sometimes bring painful short-term economic impacts, which are generally unfavorable for officials bound by two- or four-year election cycles. (Jin10)