- Key Insight: Kevin Hassett, a top White House economist and possible successor to Jerome Powell as chair of the Federal Reserve, said political independence is critical to the Fed and the lack of independence drives inflation.
- What's at stake: President Trump has embarked on a campaign to gain a voting majority on the Fed's Board of Governors by moving to fire Fed Gov. Lisa Cook late last month.
- Forward look: Hassett's comments are broadly in line with comments made by Treasury Secretary Scott Bessent in a recent opinion article, which held monetary policy independence as important but also called on the Fed to avoid political entanglements of its own.
White House National Economic Council Director Kevin Hassett said the Federal Reserve's monetary policy powers must remain independent from political influence.
Hassett, who President Trump has held up as a
"The fact is that we've looked at countries that have allowed the leaders to take over the central banks, and what tends to happen is that it's a recipe for inflation and misery for consumers," He said. "The question is, has the current central bank been as independent as we would like, as transparent as we would like … I think that there's some dispute about that."
Hassett also endorsed reviewing the Fed's functions and commitment to its mission, echoing concerns voiced by Treasury Secretary Scott Bessent about the central bank in a
Hassett's comments come amid heightened concern about the future political independence of the Fed after President Trump
Fed independence, enshrined in law for more than a century, has long been seen as a safeguard against presidents using the central bank's broad economic powers for short-term political gain. In his first term, Donald Trump openly criticized Fed Chair Jerome Powell and explored removing him and has signaled he wants greater control over monetary policy, saying he could "demand" lower interest rates.
Those concerns were furthered last week when Stephen Miran, Trump's pick to fill a seat on the Fed Board that was recently vacated by former Fed Gov. Adriana Kugler,
Unlike other independent agencies, the Fed's monetary policy body has long been assumed to be insulated from the political will of the president, though President Trump has taken an uncommonly aggressive view of presidential power and has moved to fire several Democrats serving on independent
The Supreme Court is likely to weigh in on how broad the president's removal powers are, but the court has already hinted that it may view the Federal Reserve differently than other agencies. In a ruling from May on the NLRB firing, the Supreme Court said that allowing the firing to stand would not imperil the Fed because the central bank "is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."
Bankers overwhelmingly said they support Fed independence in a
