Political pressure on the Federal Reserve reveals the risk of inflation

Inflation can get out of control if central banks fall under the control of politicians who aim to borrow more cheaply. Donald Trump has repeatedly urged the Federal Reserve to slash interest rates to cut the government's borrowing costs on its $39tn debt. In a January Truth Social post, Trump wrote that the US should be paying the lowest interest rate of any country in the world. Former Fed chair Janet Yellen compared this approach to the actions of a "banana republic," stating that the president of a developed country expressing the view that interest rates should be set to reduce debt service costs is a characteristic of such regimes. Central bank independence is compromised by presidential pressures.