Independent Fed is ‘key to successful economy’: Robert Kaplan

The Federal Reserve has been a topic of the 2024 presidential election campaigns. Vice President Kamala Harris has pledged to maintain the Fed’s independence, while former President Donald Trump has proposed a more hands-on approach.

Goldman Sachs (GS) Vice Chairman and former Federal Reserve Bank of Dallas CEO and president Robert Kaplan joins Market Domination Overtime to discuss why he believes “an independent central bank is key to a successful economy.”

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This post was written by Angel Smith

Video Transcript

Former president Trump has said he doesn’t believe in Fed independence.

It sounds like now his vice presidential candidate, JD.

Vance, agrees with him.

Thinks that politics should be a factor.

Should have some influence.

Um, and it seems like the other side.

Um, and, uh, Harris is saying she wants things to remain as they are.

I mean, what recourse is the Fed?

Have what I mean, how would this all go down and and just I’m just curious your views on all of this.

Well, so the the wisest thing the Fed should do, and I’m sure they will do is ignore the rhetoric.

Uh, history is showing, and other countries have studied, studied the US fed for a reason.

They have learned that an independent central bank is key to a successful economy.

Now, there are parts of what the Fed does, like bank regulation that is very influenced by whoever is in office, but but and the independent fed that makes decisions on the Fed funds rate without regard to political influence or political pressure, I think is essential.

We’ve learned that over history, and I don’t think you want elected leaders or political leaders to be weighing in, uh, on, uh, on monetary policy, particularly the fed funds rate.

And I’m still confident that cooler heads will prevail.

And that would be the approach that overwhelmingly, uh, I think I would hope advisers to any president would would advise them to follow.