Analysis: Federal Reserve's independence under threat, business community's silence raises concerns

On January 13, against the backdrop of the Trump administration launching a judicial investigation into Federal Reserve Chair Jerome Powell, the independence of the Federal Reserve is facing serious challenges. However, despite the traditional consensus that central bank independence is the cornerstone of developed economies, the American business community has shown unusual calmness. It has been disclosed that the U.S. Department of Justice has issued a criminal investigation subpoena to Powell regarding the costs of the Federal Reserve headquarters renovation. Powell responded with rare firmness, stating that the investigation is not about the testimony or the project itself, but because the Fed’s stance on interest rate policy did not align with the president’s preferences, which is a “threat to the Fed’s independent decision-making.” Although this incident temporarily caused market fluctuations, large corporations, industry organizations, and CEOs almost collectively remained silent in public. Jeffrey Sonnenfeld, founder of Yale University’s Chief Executive Leadership Institute, pointed out that private surveys show that 71% of CEOs believe the Trump administration is eroding the Fed’s independence, and 80% think that pressuring for rate cuts does not serve the overall American interest, but they are generally worried that speaking out publicly could lead to political retaliation. Analysts believe that the silence of the business community is driven by both practical concerns about “being targeted for retaliation” and reliance on the low-interest-rate environment coupled with speculative psychology. Some corporate executives choose to influence policy through private communication, while others bet that Trump will ultimately “retreat at the last minute (TACO)” in his more aggressive actions. Some scholars point out that the market’s vigilance against political interference in central banks is decreasing, and some business and Wall Street figures even agree with Trump’s intuitive judgment. This attitude may indicate that U.S. monetary policy is entering a new phase with more political influence.