Monetary Policy

You can now watch the replay of our webinar “Under Pressure: Checks and balances in central banks”

In 2017, when the Federal Reserve (Fed) was preparing to shrink its balance sheet, then-chair Janet Yellen famously described the process of quantitative tightening (QT) as being "like watching paint dry."

Political influence over monetary policy can undermine long-term economic stability, with a potential impact on investor confidence, bond markets, and the broader economy. This article explores scenarios ranging from zero influence to a mild erosion of US Federal Reserve independence to outright political capture.

Jerome Powell and his Federal Reserve (Fed) colleagues decided to cut the Fed Funds rate by 25bp to 3.75-4% at last week’s policy meeting, marking 150bp of cuts since the cycle began in September 2024.

Amidst an economic data blackout caused by the US government shutdown, markets received a bit of positive news on Friday with the release of the US CPI report which showed consumer prices in September increased at a slower pace than expected.

The Federal Reserve (Fed) cut interest rates by 25 basis points (bp) on Wednesday, exactly as markets had anticipated, marking its first rate reduction since December 2024.