Independent central banks have proven to be critical for the smooth functioning of financial markets.
non-independent. Suppose there is a forced change (the legality of which would likely be in courts for months and beyond Jerome Powell’s term) or a non-independent voice as Fed chair versus the current Federal Reserve Board members. In that case, other aspects of running banking and financial regulations, oversight, and other indirectly related policies may change. The shape of the first figure, becoming less predictable, would have global consequences. It may lead other countries to consider how inflation bias, which would almost certainly emerge from a change that leads to new policy paths, could help political parties remain in power. g
Turkey Central Bank Rate and US Federal Funds Rate, Jan 1982 to May 2025, Monthly
policy makers intend for financial markets to also function well, versus stomach- churning uncertainty (think Turkey, for example). Notice in the figure how long some of the rate reductions are and how
violent some of the increases (between 2023 and 2024, rates increased over 40% for a bit) are in Turkey, in contrast to the United States; Turkey’s central bank is very much tied to its political processes and
Dr. Robert Eyler is professor of economics at Sonoma State University and president of Economic Forensics and Analytics in Sonoma County.
September 2025
NorthBaybiz 19
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