A note from JPM US chief economist Michael Feroli, his take on Federal Reserve independence under a second Trump term.
As well as existing features that can help insulate the Fed from political pressure, for example:
- firing Federal Reserve Chair Powell would be difficult
JPM point to financial markets:
- “Another possible check on an attempted removal of a sitting Fed chair is the reaction of financial markets. As president, Trump was very attuned to asset prices as a scorecard on his administration. Ousting a chair as respected as Powell could provoke sharp reaction in markets, possibly raising Treasury borrowing costs and threatening the dollar’s reserve currency status.”
JPM add that A harris win will mean no change to the bank’s independence, “there are more interesting questions following a Trump victory.”
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31 days ’til the election! I’m going to be posting more on it as we approach, it’s a big market event. This should bring the partisan hacks frothing at the mouth into the comments. It’ll be fun banning them – this site is for traders!