A primer on the Federal Reserve's independence

Planet Money

NPR

Business, News

4.6 • 29.8K Ratings

🗓️ 23 April 2025

⏱️ 20 minutes

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Summary

President Donald Trump has been loudly critical of Federal Reserve Chair Jerome Powell for years now. Since January, the President has accused him of playing politics by keeping interest rates high. Trump has also threatened to oust Powell — which would mark an extraordinary shift away from the independence of the central bank.

Today on the show, three Indicators: a short history of the Federal Reserve and why it's insulated from day-to-day politics; how the Fed amassed a ton of power in recent years; and a Trump executive order that took some of that power away.

The original episodes from the Indicator were produced by Corey Bridges, Brittany Cronin, and Julia Ritchey. They were engineered by Cena Loffredo, James Willetts, and Gilly Moon, and fact-checked by Sierra Juarez. Kate Concannon is the editor of the Indicator. Follow us wherever you get your podcasts.

This episode of Planet Money was produced by James Sneed and edited by Marianne McCune & Mary Childs. Alex Goldmark is our executive producer.

For more of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org. Or, find us: TikTok, Instagram, Facebook.

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Transcript

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0:00.0	This is Planet Money from NPR.
0:05.9	Over the past week, President Donald Trump has gone from threatening to oust Jerome Powell,
0:11.9	the chair of the Federal Reserve, to saying he has no intention of firing him.
0:17.3	And this is not the first time Trump has raised this possibility of interfering with the Fed or even
0:22.7	firing Powell. Trump has been lowly critical of Powell for years now. And since January, the
0:28.8	president has accused him of plain politics by keeping interest rates high. And though so far,
0:34.9	Trump hasn't taken any action to dump Powell, every time Trump's anger at the Fed chair flares, markets quiver and economists start flipping out.
0:45.5	Because they say the Fed has to be independent.
0:48.8	It has to focus on keeping the economy healthy.
0:51.4	And that process must be free from politics and pressure. It needs to just focus on what's right for the economy healthy, and that process must be free from politics and pressure.
0:55.4	It needs to just focus on what's right for the economy.
0:59.0	But why exactly?
1:01.6	Hello and welcome to Planet Money. I'm Darian Woods.
1:04.3	And I'm Waylon Wong.
1:05.6	Why is the independence of the Federal Reserve so sacred?
1:09.0	Why does just the idea of Trump interfering with the Fed send economists into a tizzy?
1:15.0	Today on the show, a primer on the Fed.
1:17.9	From the Indicator podcast, we have three ways of looking at that question for you today.
1:22.4	We'll look at what the Fed does, why its independence is so important,
1:27.0	and one quieter step President Trump has taken to influence the Fed does, why its independence is so important, and one quieter step President Trump has
1:29.8	taken to influence the Fed this year.
1:38.2	The Federal Reserve, the U.S. Central Bank, has two big goals, keeping prices stable and jobs plentiful.
	...

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