"Many on Wall Street are nervously eyeing just how far the White House is going to press into the Jerome Powell-led institution. The battle has been over the lowering of the base rate, as President Trump wants, and shaping the members of the Federal Open Market Committee more closely to the direction the Oval Office wants to take the economy."
"The Citadel CEO highlighted that long-term debt covers a range of borrowing which is not limited to individuals: It includes governments financing their deficits, families trying to afford homes and companies investing. The Citadel CEO-alongside Anil K. Kashyap of the Chicago Booth Business School-wrote that while the Trump administration has been right to focus on lowering costs for consumers and businesses, his methods are damaging future prospects:"
White House pressure to lower the Federal Reserve's base rate and to shape Federal Open Market Committee appointments raises concerns about political meddling in central bank independence. Market participants fear that undermining Fed autonomy would erode investor confidence and push up long-term borrowing costs, affecting government deficit financing, mortgages, and corporate investment. Historical episodes such as confrontations during Nixon's era and the U.K.'s Liz Truss meltdown demonstrate that lost confidence is costly and slow to rebuild. Efforts to reduce near-term costs for consumers and businesses can damage future economic prospects if they compromise the Fed's long-term mandate.
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