Marketplace All-in-One The Fed under attack
Jan 12, 2026
Wendy Edelberg, a senior fellow at the Brookings Institution and former Fed economist, and Alan Blinder, former vice chair of the Federal Reserve Board, discuss a significant investigation into the Fed and Chair Powell. They explore the implications of perceived political threats to Fed independence and how this might affect market reactions. Edelberg emphasizes the potential risks to market credibility, while Blinder highlights the serious implications of a politicized Fed. The duo offers insights into monetary policy and the future of economic stability.
AI Snips
Chapters
Transcript
Episode notes
Direct Political Pressure On The Fed
- The DOJ subpoena and threat of a criminal probe into Jerome Powell signal direct political pressure on the Fed.
- Kyle Rizdahl frames this as an unprecedented challenge to monetary policy independence.
Markets Are Complacent—for Now
- Markets largely ignored the DOJ action and Trump's attacks, leaving short-term rates unchanged.
- Wendy Edelberg warns that market complacency could change suddenly and be costly if credibility erodes.
Why Bond Markets May Be Wrong
- Markets may assume a pro-Trump Fed pick will still safeguard independence or that other FOMC members will restrain the chair.
- Edelberg argues neither assumption is reliable given likely executive-branch pressure on multiple Fed actors.