National News 9/15/25
Tariff, inflation, interest: these are words that have become particularly popular in political debates and discussion over the past couple of years. Whether in online forums or on the presidential debate stage, the current state of the economy has become a central issue for many Americans, especially after the COVID-19 pandemic. Recently, one of the biggest topics concerning the issue of the economy has been the relationship between the Federal Reserve (or the ‘Fed’) and the Trump Administration. For many, understanding the logistics of the American economic system can feel overwhelming and complex. Yet, the issue is extremely important and can have direct consequences on American’s day-to-day lives. So, how do we understand the current news involving the Federal Reserve and the current administration? First, let’s discuss the Fed and its responsibilities, members, and role in the American economic system.
One of the most important players in America’s economic system is the Federal Reserve, the United States’ central banking system. Primarily, the job of the Fed is to ensure that inflation rates are kept low, while employment rates are kept high. These goals are achieved by various modes of regulation which influence the US economy as a whole. The most vital aspect of the Fed is that it is politically independent as an organization and does not affiliate itself with any political party, agenda, or interests. Although the sitting president is able to appoint the Fed’s governors and chair–all of which must receive Senate approval and serve staggered 14-year terms–the president cannot control the agency in any form. This allows the Fed to make decisions without political pressure. However, over the last few weeks, President Donald Trump has pressured the Fed by threatening to fire several of its governing members if interest rates are not lowered (part of the administration’s efforts to influence the housing industry by lowering mortgage rates). Yet, the Fed has resisted the administration’s efforts, arguing that a cut to interest rates, although likely to boost the economy in the short run, will likely mean a rise in inflation in the long run. Additionally, the Fed has stated that interest rates would have been lowered by now, if not for the tariffs instituted by the Trump Administration, which, according to economists, will likely continue to raise inflation rates. On the other hand, the Fed is predicted to lower interest rates slightly in September, but not as much as the Trump Administration has been pushing for.
People such as Jerome Powell, the Fed chair, and Lisa Cook, a member of the Fed’s board of governors, have particularly experienced pressures from President Trump and the Trump administration, which has attempted to remove both people from their positions. Powell was targeted by Trump on the social media app Truth Social, with the President posting that “[Powell] is hurting the Housing Industry, very badly” and that “there is no Inflation, and every sign is pointing to a major Rate Cut.” On August 25th, Trump also tried to fire Cook over claims of mortgage fraud presented by one of his appointees. However, despite Trump’s claims that inflation isn’t rising, statistics show that the US has been experiencing a slow increase in inflation over the past month and is still above the Fed’s goal of 2%. Further, Trump’s claims about Powell “hurting the Housing Industry” are also inaccurate and misleading. Although the Fed has influence over the housing industry, mortgage rates are usually set by the 10-year US Treasury Bond, a government debt security in which the government pays back a standard rate to investors, which serves as a point of reference for other interest rates– not the Fed.
So, what should Americans expect? As Trump continues to pressure Fed members, many question whether the institution will fall under political control. If that is the case, the Fed will be departing from a tradition of independence that it has maintained since the mid-20th century. The independence of the Fed is strongly favored by economists, since, as an independent agency, the Fed is able to make unpopular decisions that may not be politically beneficial for elected officials. If that independence is taken away, many worry that the bank could be manipulated as a tool for political gain, ultimately impacting not only the US economy but also the lives and families of all Americans.
To learn more about this story:
AP News - How the Fed losing its independence could affect Americans’ everyday lives