People speculate that if Trump is re-elected as president, he may increase the pressure on the Federal Reserve. In response, the Biden administration emphasized that the government “unswervingly supports” the independence of the Federal Reserve.

There were reports last month that Republican presidential candidate Trump's allies are quietly drafting proposals. If the former president wins the election, then he will try to weaken the independence of the Federal Reserve after coming to power.

The White House Council of Economic Advisers (CEA) cited historical evidence in a blog post published on Wednesday that the independence of the Federal Reserve has strengthened its credibility among the public, thereby improving its ability to anchor inflation expectations and maintain price stability.

The article stated, “The Biden administration is deeply inspired by this period of history and will continue to unswervingly support the independence of the Federal Reserve. History clearly shows that ignoring this lesson or reversing the hard-won progress of the past half century will have long-lasting and harmful inflationary consequences.”

This is a widely accepted view among economists, and has been proposed by Jared Bernstein (Jared Bernstein), a long-time close friend of Biden and a member of the White House Economic Advisory Committee. Federal Reserve policy makers themselves often emphasize this view, including Federal Reserve Chairman Powell. Powell, along with most of the world's central bank leaders, has been fighting inflation for more than two years.

The Federal Reserve raised interest rates in 2022 and 2023 to curb soaring inflation, and US interest rates have remained at their highest level in more than 20 years since July last year. Although price increases have cooled sharply, progress in fighting inflation has slowed this year. Policymakers say they may keep interest rates high for longer than previously anticipated.

The Biden administration has been struggling to deal with voters' strong aversion to high inflation, but has expressed respect for the independence of the Federal Reserve. However, in April, Biden once again reiterated his previous prediction that the Federal Reserve would cut interest rates in 2024.

Meanwhile, Trump said that if he is re-elected as president this fall, he will not re-appoint Powell as chairman of the Federal Reserve, and his advisors are raising the possibility of reforming the Federal Reserve, which will give him more influence over the Fed's decisions.

During his presidential term from 2016 to 2020, Trump promoted Powell as chairman of the Federal Reserve, but later expressed anger and frustration that Powell did not cut interest rates when he thought he should cut interest rates to boost the economy.

Powell has stated many times in recent months that the Federal Reserve's decisions are based on the principle that is most beneficial to the economy and will not involve himself in partisan politics.

Trump pointed the finger at Biden, who will run for re-election with the former Republican president in November. Trump accuses Biden of allowing the inflation rate to remain high and said he believes Powell will lower interest rates to help Biden run for re-election.

Although the US inflation rate has cooled drastically from its peak in mid-2022, it is still a long way from the 2% target. Policymakers said they won't cut interest rates until they are more confident that inflation will move towards this target.

In the CEA blog post, it credits the Federal Reserve's ability to reduce inflation as much as possible without harming the labor market to its independence.