Summary
The Justice Department has threatened the Federal Reserve with criminal charges over testimony by its Chair, Jerome Powell. President Trump has criticized Powell and tried to exert control over the Federal Reserve by pushing for lower interest rates and criticizing its renovation spending. Maintaining the Federal Reserve's independence is considered crucial for the economy, as it allows the central bank to make decisions without political pressure.
Key Facts
- The Justice Department threatened criminal charges against Federal Reserve Chair Jerome Powell.
- President Trump has criticized Powell for not cutting interest rates more.
- Trump has also accused Powell of mismanaging a $2.5 billion renovation at the Federal Reserve.
- The Federal Reserve's independence lets it manage interest rates to control inflation and economic growth without political interference.
- Independent central banks can make unpopular decisions, like raising interest rates to control inflation.
- An effort to fire Powell could negatively impact the stock market and increase borrowing costs.
- The significance of the Federal Reserve's independence became clear after high inflation in the 1970s and early 1980s.
