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Kevin Warsh, the new Federal Reserve chair, has pledged that the central bank's independence will remain intact, telling fellow central bankers that price stability will be the institution's guiding focus — regardless of any pressure that may come from the White House.
The statement arrives at a moment when the relationship between the Fed and the executive branch is under heightened scrutiny.
What Fed Independence Actually Means Central bank independence is the principle that monetary policymakers set interest rates and manage the money supply free from political direction.
The logic is straightforward: elected officials face short-term incentives — stimulus before an election, for instance — that can conflict with the longer-term discipline required to keep inflation under control.
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