Powell on Fed independence: 'It's very important'

• Fed independence is essential for serving the public, not for protecting policymakers.
• It is a common and effective institutional arrangement in advanced economies and democracies worldwide.
• Independence prevents direct elected official control over monetary policy, safeguarding against its use for political purposes during election cycles.
• Losing this independence would severely undermine the Fed's credibility and its ability to effectively serve the public.

Fed Chair Jerome Powell strongly defended central bank independence, stating it is 'very important' and a common practice among advanced democracies. He argued that this institutional arrangement prevents the politicization of monetary policy, ensuring decisions are made for the broad public good rather than short-term political gain, which is crucial for maintaining the institution's credibility.