In the US, the central bank is independent from the US
government; however, just like the supreme court, the chair of the US Fed is
named by the President, so the US government definitely has some influence over
the central bank. Of course, though the US government cannot directly ask the
US Fed to make certain monetary policies, the US government could send signals
to the market about their wanted monetary policies or at least future policy
directions. The naming of the nominee for the chair of the US Fed is a great
tool to send signals to the market. The candidates for the chair of the US Fed
are usually well respected in the financial sector; however, they hold
different opinions about the future monetary policy decisions, some of them may
love to loosen the policy and focus more on the economic growth, and some could
focus more on limiting the inflation in the economy. Based on the candidates’
different opinions about the future monetary policy, the US president could
name the one whose opinion matches the best; therefore, the policy opinion of
the nominee pointed by the President also represents the opinion of the White
House. Of course, once the nominee officially becomes the chair, he or she
could adjust the policy plan, but the main direction of the future monetary
policy is very likely to stay the same, because unlike a supreme court judge,
the chair of the US Fed has a term, they are less likely to be fully neutral
and independent.
In general, the chair of the US Fed can smoothly finish his
or her job in his or her term, as he or she also present the opinion from the
US government.
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