President Trump's public criticism of the Fed isn't new.
But in its second term, the Trump administration is preparing to turn words into action.
It's setting in motion a challenge to the precedent that has long prevented presidents from firing officials of independent agencies without cause.
So is the Fed's independence in jeopardy?
And how much independence should the Fed have anyway?
I'm Allison Nathan, and this is Goldman Sachs Exchanges.
Each month, I speak with investors, policymakers,
and academics about the most pressing market-moving issues for our top-of-mind report from Goldman Sachs Research.
I recently spoke with former Fed Vice Chair Richard Clarida and the Hoover Institution's John Cochran about the independence question.
I started by asking Clarida what Fed independence really means.
Congress created the Fed as what we call an independent agency in 1913 and intended for it to have a degree of independence.
How so?
First, Federal Reserve governors have 14-year terms,
and they are appointed on a staggered basis so that governor terms come up only once every two years,
the idea being originally that it would be difficult for any one president to appoint an entire board.
Federal Reserve governors can only be removed for cause.
And for cause has been interpreted by the Supreme Court as malfeasance,
neglect, or dereliction of duty.
So essentially,
the Congress intended for Fed officials not to be fired by the president solely