Letting politics steer monetary policy can be risky.
Cutting interest rates might feel good at first – a kind of economic sugar rush.
But over time, it can lead to rising inflation, market instability, and higher costs for borrowers.
In 2010, then Fed chair Ben Bernanke warned that political interference could create damaging “boom and bust” cycles and make inflation harder to control.
And it’s not just a domestic issue.
Global investors rely on the Fed and US Treasury bonds as a financial safe haven.
If they start to doubt the Fed’s credibility, borrowing costs for the US government could rise – and that would have knock-on effects around the world since they are used to set the price of assets around the world.