WSJ's Take On the Week Trump Is Meddling With the Fed. Why Don’t Markets Care?
Oct 9, 2025
Nick Timiraos, Chief economics correspondent at The Wall Street Journal, dives into the critical issue of Federal Reserve independence under political pressure from President Trump. He discusses the historical context of the Fed's autonomy and the implications of removing Governor Lisa Cook. The conversation highlights market reactions—or lack thereof—regarding these political maneuvers, exploring scenarios that could trigger investor panic. Timiraos emphasizes the delicate balance needed to maintain economic stability amidst political interference.
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Fed Independence Is Cultural, Not Absolute
- The Fed's independence is cultural and built over decades, not guaranteed by a single law.
- Nick Timiraos says it would take sustained efforts over years to erode that culture.
1935 Reforms Built Legal Scaffolding
- The legal basis for Fed independence rests mainly on 1935 reforms and long, staggered terms for governors.
- Those 14-year terms and 'for cause' removal rules were meant to protect unpopular policymaking.
Independence Took Decades To Mature
- Fed independence evolved slowly and wasn't fully respected until decades after 1935.
- Nick Timiraos notes it crystallized around the 1980s–1990s rather than immediately after reforms.