The last couple of months have been marked by political pressure, investigations, and even threats to remove Powell over the cost of renovations at the central bank. The path forward for the central bank may be even more complicated with Kugler’s resignation.
Sam Williamson (pictured top), senior economist at First American, said it’s a challenging time at the Federal Reserve.
“The US faces its own challenges, including stickier inflation and the possibility of tariff-induced inflation reacceleration, which complicate the Fed’s path forward,” Williamson told Mortgage Professional America. “Still, the Fed has shown it’s willing to act decisively if conditions shift, as evidenced by the 50-basis-point cut last September in response to signs of labor market softening.”
Fed independence and political pressure
There has been considerable discussion about the challenges to the Federal Reserve’s independence over the past few weeks, as criticism of Powell and the central bank continues to intensify. Williamson said that political pressure is nothing new, and that there are enough safeguards in place to keep the Fed from being politicized.
“Political pressure on the Fed is nothing new, and its independence has always existed within a broader political framework,” he said. “A combination of laws, norms, and institutional design grants the Fed meaningful autonomy in setting monetary policy. Governors serve staggered 14-year terms, the Fed is self-funded, and regional presidents are selected independently of the White House. These features help insulate the FOMC from short-term political influence.
