Fed Chair Powell (Q&A) says every advanced economy has made the decision to keep monetary policy as independent, want to take it out of the direct control of elected officials
Importance
Level 1
- Says elected officials always want low rates, which can lead to inflation
- Independence model has worked great in tackling inflation
- It is not bipartisan, it is non-partisan
- Without this, markets would not believe Fed's ability to control inflation
- Fed's credibility in markets has not weakened
- Markets are pricing in Fed credibility