Federal Reserve Board Member Waller Defends the Federal Reserve's Independence: Trump's Criticism Sparks Concerns, Supreme Court to Review Case on Presidential Dismissal Powers

Taiwan • Politics • 20h ago
Federal Reserve Board Member Waller Defends the Federal Reserve's Independence: Trump's Criticism Sparks Concerns, Supreme Court to Review Case on Presidential Dismissal Powers

On May 9, 2025, Federal Reserve Governor Christopher Waller emphasized the importance of the Fed's independence for economic stability at the Hoover Institution at Stanford University. Meanwhile, former President Trump had repeatedly criticized the Fed and Chairman Powell, sparking concerns over political interference. The U.S. Supreme Court is currently hearing a case regarding the president's ability to dismiss officials from independent agencies, which could affect the Fed's institutional framework.

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Federal Reserve Board Member Waller Defends the Federal Reserve's Independence: Trump's Criticism Sparks Concerns, Supreme Court to Review Case on Presidential Dismissal Powers

On May 9, 2025, Federal Reserve Governor Christopher Waller emphasized the importance of the Fed's independence for economic stability at the Hoover Institution at Stanford University. Meanwhile, former President Trump had repeatedly criticized the Fed and Chairman Powell, sparking concerns over political interference. The U.S. Supreme Court is currently hearing a case regarding the president's ability to dismiss officials from independent agencies, which could affect the Fed's institutional framework.

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Federal Reserve System Design: A Stability Mechanism Beyond Political Cycles

At a monetary policy conference held by the Hoover Institution, Waller clearly stated that the design of 14-year terms for Federal Reserve Board members has stood the test of time and should be maintained. He emphasized that these members cannot be dismissed by the president at will due to policy disagreements, which helps reduce economic fluctuations and inflationary pressures.

Waller cited his own research, noting that by allowing the president to nominate some board members during a four-year term, with Senate confirmation, the system ensures democratic accountability while safeguarding the objectivity and non-partisanship of monetary policy. He stated, "This system has stood the test of time, and I hope it will continue to be maintained in the future."

Trump's Criticism of the Federal Reserve and Powell Draws Market Attention

Waller's remarks come against the backdrop of former President Trump's recent frequent criticisms of the Federal Reserve. Trump has publicly stated that Federal Reserve Chairman Powell is "slow" and described conversations with him as "like talking to a wall." He even posted on social media that "the sooner Powell is out, the better," although he later clarified that he would not fire Powell. This move has already heightened market concerns about the Federal Reserve's independence.

Trump's criticism is not new. During his first term, he repeatedly pressured the Federal Reserve to cut interest rates and expressed dissatisfaction with its monetary policy direction. Recently, while pushing for a new round of tax reform, he urged investors to "buy stocks now," claiming that the U.S. economy would "rocket up like a rocket," and criticized Democrats for opposing the bill due to political stances.

Waller: Independent Decision-Making Contributes to Long-Term Economic Stability

In his speech, Waller did not directly comment on the current monetary policy stance or economic outlook, but he emphasized that economic stability comes from a decision-making team with a long-term vision that is not influenced by short-term political pressures. He pointed out, "Monetary policy formulated by professionals who cannot be dismissed over policy disagreements can effectively reduce economic volatility and inflation risks."

He further stated that the Federal Reserve's independence is not only a result of system design but also a guarantee of social welfare. This system allows decision-makers to persist in long-term economic interests when facing short-term unpopular policy choices.

Supreme Court Hearing on Presidential Dismissal Authority Case: Federal Reserve Closely Monitors

Currently, the U.S. Supreme Court is hearing a case involving whether the president has the authority to dismiss officials of independent agencies. The outcome of this case could significantly impact the Federal Reserve's system design. Although the terms and dismissal conditions of Federal Reserve Board members are legally protected, if the Supreme Court rules that the president has greater dismissal authority, it could undermine the foundation of the Federal Reserve's independence.

Waller did not comment specifically on the case, but he repeatedly emphasized the importance of system stability to the economy in his speech, which is widely seen as a preemptive defense against potential political interference.

Consensus Within the Federal Reserve and Academia: Independence is Non-Negotiable

In addition to Waller, other Federal Reserve officials and economists also generally support the independence of the central bank. Former Federal Reserve Chairman Ben Bernanke once pointed out that political interference in monetary policy could result in "unstable economic cycles and high inflation." According to research by Waller and other scholars, independent central banks perform better in controlling inflation and maintaining economic stability than politically influenced institutions.

Waller also mentioned in his speech that the Federal Reserve's system design not only enhances the credibility of policies but also provides market predictability regarding its decisions, which is crucial for business investment and consumer confidence.

References

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