US Federal Reserve stresses its political independence amid heated presidential campaign

The US Federal Reserve stressed the importance of its political independence at a time when Donald Trump, who has frequently attacked the Fed’s policymaking in the past, is moving closer to formally becoming the Republican presidential nominee.

On Friday, the Fed released its semiannual report on its interest rate policies, a typically dry document that includes mostly its analysis of job growth, inflation, interest rates and other economic trends. The report includes brief text boxes that focus on generally technical topics, such as monetary policy rules.

The report is typically released on the Friday before the Fed chairman appears before House and Senate committees as part of the central bank’s semiannual report to Congress.

Many of the text boxes appear in most reports, such as one that focuses on employment and income for different demographic groups. However, Friday’s report includes a new box titled “Monetary Policy Independence, Transparency, and Accountability.” It’s there that the Fed stressed the vital need to work independently of political pressures.

“There is broad support for the principles underlying independent monetary policy,” the report said. “Independent monetary policy operations have become an international norm, and international research indicates that economic performance has tended to improve when banks have such independence.”

The remarks signal the Fed is seeking to bolster congressional support for its independence, which Chairman Jerome Powell called an important bulwark against political attacks on the Fed earlier this week.

A Fed spokesman declined to comment on the inclusion of the text box.

“I think support for Fed independence is very high on Capitol Hill, where it really matters, across both political parties,” Powell said Tuesday during a monetary policy conference in Portugal.

Before the pandemic hit in 2020, Trump as president hounded the Fed to cut its benchmark interest rate, which can lower the cost of borrowing for consumers and businesses and stimulate the economy.

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