Thursday, Jan. 30, 2025 The Federal Reserve held interest rates steady Wednesday maintain the rate at its current range of 4.25% to 4.5% and President Trump argued in no time calling Fed Chair Jerome Powell and the central failed to stop the problem they created and continued that the Fed has done a terrible job.
President Donald Trump repeatedly suggesting that he would bring interest rates lower has raised fears about political control of monetary policy. As a separate institution the Federal Reserve needs to stay independent from any politicians’ control.
“I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!” said President Trump. We don’t argue his nationality, his love for the nation is undoubted, but The Fed makes decisions based on economic data rather than political demands and the officials have consistently emphasized their commitment to maintaining autonomy, ensuring that their policies are not influenced by short-term political interests.
Economic expert and guru investor Ray Dalio (Trades, Portfolio) explains why Federal Reserve autonomy is vital for the economy. In a new YouTube Shorts video, Dalio discussed when authorities manipulate central banks they reduce financial stability.
The Fed warned that letting politicians control its operations will spark financial disruptions while creating unpredictable market cycles. Dalio recommends that keeping actual bond yields near 2% helps maintain both nation-building and price stability.
By asking for lower interest rates Trump appeals to his supporters and businesses seeking cheap loans yet economic experts worry about interfering with the Fed’s role. Political interference with the Fed’s decisions may fuel economic benefits today but may hurt financial health tomorrow.
Experts and the Fed officials reject Trump’s idea to influence the Fed’s decisions as the Fed’s independence is critical and monetary policy must all the time be free from political interferences.
Venezuela had demonstrated the negative effect of political interventions to monetary decisions. When politicians control the central bank, the people must pay expensive price for the mistake of their leader by having economic instability that the politician itself can’t fix.
Venezuelan politicians had gone too far, they even controlled printing money and caused severe hyperinflation and destroyed faith in their national currency. Maintaining the independence of institution like central banks is crucial, monetary policy can’t be adjusted to any administration under any interests and should be free from any politicians’ interference.
