The Federal Reserve's independence faces a "trial of the century": credibility is in jeopardy

Odaily Planet Daily reports that this week, the Federal Reserve will face its most severe test of independence in its hundred-year history. This issue is not only about the fate of a single official but also about whether the Federal Reserve will become the “backyard” of the U.S. President. The case revolves around Trump’s attempt to dismiss Federal Reserve Board member Cook, citing allegations of mortgage fraud. In extreme cases, this case could erode the independence that the Fed values, and even if it doesn’t reach that point, it could serve as the first “operating guide” on how a president might remove someone from this tightly protected central bank management body. Dismissing a Federal Reserve Board member should be a difficult task, a principle reflected in the requirement of “just cause” and the 14-year term, although few manage to serve the full length. Monetary policy decisions can sometimes cause painful short-term economic impacts, which are usually unfavorable for officials bound by two- or four-year election cycles. (Jin10)