Bloomberg Surveillance Trump's Fed Gamble and Nvidia Earnings
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Aug 27, 2025 
Adam Posen, President at the Petersen Institute for International Economics, shares insights on the challenges to central bank independence amid political pressures. He discusses the vital role of the Federal Reserve in managing inflation and the potential impacts of Trump's influence on interest rates. Tony Crescenzi from PIMCO elaborates on the current bond market trends and the significance of high-quality credit yields. They both analyze Nvidia's earnings and the broader implications for market dynamics, navigating a complex economic landscape.
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Political Pressure Threatens Fed Independence
- Adam Posen warns that the Trump administration is using lawfare and political pressure against Fed officials, threatening central bank independence.
- He notes market reaction has been limited so far, but institutional changes to Reserve Bank presidencies pose a larger long-term risk.
Why Operational Independence Matters
- Posen outlines four rationales for operational central bank independence, including anchoring expectations and avoiding fiscal dominance.
- He argues politicizing appointments risks weaker supervision and worse policymaking outcomes.
Demoralizing Experts Weakens Policy
- Posen describes demoralization among Fed staff when expertise is ignored, harming analysis and retention.
- He compares the effect to having a bad boss who values select voices over evidence-based debate.
