Why the Damage to Fed Independence May Have Already Been Done

In this episode of the Odd Lots podcast, hosts Tracy Alloway and Joe Weisenthal interview Carola Binder, an economist, about central bank independence. They discuss the increasing political pressure on central banks, particularly the US Federal Reserve, and the potential macroeconomic effects. Binder shares her research on the distinction between legal and actual central bank independence, noting that even when central banks have legal protections, political pressure can still lead to higher inflation expectations. The conversation explores the historical context of Fed independence, the role of public perception, and potential ways to ensure accountability without sacrificing independence, such as limiting the Fed's mandate and increasing transparency. The hosts and guest also examine how attacks on central bank independence may reflect a broader deterioration of political norms.