Bank of Dallas President Lorie Logan said the US central bank is further away from its inflation target than it is from the maximum employment goal, and reiterated that officials should move cautiously with interest-rate reductions https://t.co/HtR2xIzgoh ...

Fed Independence and Political Pressure - Markets rely on the Fed's independence and commitment to price stability and maximum employment [3] - Historical examples show that presidential pressure on the Fed can lead to stagflation [6][7] - Concerns exist regarding potential Fed chair candidates expressing opinions on future monetary policy [17] - A "shadow Fed chair" is a dangerous idea that impairs the credibility of the actual Fed chair [23][24] Economic Outlook and Policy Concerns - The economy is resilient, but concerns exist about future tariff policies [25][26] - Tariffs could lead to increased inflation and decreased household incomes [27][29] - Softness is developing in the labor market, with average job creation around 150,000 jobs per month [28] - Concerns exist about weaknesses in the legislation regarding stable coins and their potential financial stability risks [34] Monetary Policy and Inflation - The Fed's goal is price stability, aiming for 2% inflation, and maximum employment [3][12][15] - Lowering interest rates to ease financing costs on federal debt is not a congressionally mandated goal and is dangerous [3][15] - High inflation is an inevitable consequence when pressure drives monetary policy [3] Fed Leadership and Transition - The President should choose a Fed chair who believes in and will defend the Fed's independence [14] - The next Fed chair should make fact-based judgments based on economic trends and the congressionally mandated goals [15] - The current Fed chair is committed to the Fed's independence and should fulfill his term [31][32]

Fed Independence and Market Reaction - Market reaction to potential Fed Chair ouster includes a decline in the dollar's exchange value, an increase in longer-term interest rates, and a stock market decline [2] - Markets rely on the Fed's independence and commitment to price stability and maximum employment when assessing the US economy [3] - Presidential pressure on the Fed to lower interest rates for government financing purposes is disconcerting to markets and can lead to high inflation [3] Historical Context of Fed Independence - Historically, presidents have attempted to pressure Fed chairs, such as LBJ and William Martin in 1965 [5][6] - Richard Nixon's pressure on Arthur Burns led to stagflation, weak growth, high unemployment, and high inflation [7] - Fed's track record over many decades has been successful in maintaining low and stable inflation [12] Current Economic Situation - The US post-pandemic experience saw a surge in price pressures, similar to other developed countries [13] - Inflation is coming down and is close to the Fed's 2% goal, with a strong labor market at 41% unemployment [13] Fed Leadership and Political Influence - Many Fed chairs have had past experience in the White House, which is natural as presidents gain confidence in their judgment [10] - Fed chairs should make fact-based judgments and pursue congressionally mandated goals of price stability and maximum employment [10][11] - Fed chairs need to stay out of politics and avoid succumbing to short-term political pressures, behaving in a nonpartisan way [12]