The Federal Reserve, created in 1913, is America’s central bank. Its core tasks are threefold: keep prices stable, promote maximum employment, and safeguard the financial system. Its most powerful tool is setting interest rates — raising them to cool inflation or cutting them to spur growth. Because the dollar is the world’s reserve currency, every Fed decision shakes not only the U.S. economy but global markets as well.

Ever since Donald Trump entered office, he has sparred with the Federal Reserve. Trump wanted lower interest rates to spur growth; the Fed refused, citing stubbornly high inflation. At one point, Trump even threatened to fire the Fed chair. The tug-of-war never really ended during his presidency. (RELATED: They Don’t Really Want To Stand Behind Lisa Cook, Do They?)

Supporters of Trump argued that the Fed itself was political, using rate hikes as a tool with its own bias. Critics accused Trump of trampling the sacred “independence” of the central bank. Who was right? To answer that, we need to confront two questions: Should the president comment on and seek to influence Fed policy? And does the Fed’s independence mean it is always correct?

1. The President’s Right to Speak

The first answer is simple: yes. The president not only may, but should express his view on interest rates.

The president is the elected voice of the American people. Interest rates affect every mortgage holder, every business seeking financing, every worker dependent on jobs and price stability. To suggest the president must remain silent on such matters is to deny the people’s elected leader a say on one of the most important drivers of economic life. (RELATED: Trump and the Fed: Fiscal Dominance or Just Politics?)

Moreover, Fed independence was never meant to be absolute. Article I, Section 8 of the Constitution assigns Congress the power “to coin Money, [and] regulate the Value thereof.” The Federal Reserve is a creature of statute, created by the Federal Reserve Act of 1913. Its authority flows from Congress, not from the Constitution itself. A president, therefore, has every constitutional legitimacy to voice his concerns, even to exert pressure.

And history shows that presidents have always done so. Lyndon Johnson leaned on the Fed for easy money in the 1960s. Richard Nixon strong-armed Fed Chair Arthur Burns in the early 1970s. Trump was not the first president to criticize the Fed — only the most blunt and public. Most presidents push the Fed to lower rates — cheap money flatters growth, jobs, and markets, all good for reelection. Calls for higher rates are exceedingly rare.

To cast presidential criticism as “dictatorship” is misleading. A president speaking out is not authoritarianism. It is democracy.

Of course, Trump is Trump: blunt, sometimes reckless in his language. But rhetoric aside, his right to weigh in is legitimate.

2. The Myth of Fed Infallibility

The second question is equally important: Does Fed independence mean the Fed is always right? The answer is plainly no. History is full of Fed missteps, each with devastating consequences for the economy. (RELATED: The Washington Post Is Wrong: History Proves the Federal Reserve Econometric Models Cannot Make a Fiat Money System Work)

The Great Depression (1929–33)

After the stock market crash of 1929, the Fed did precisely the wrong thing. Instead of providing liquidity, it tightened monetary policy and raised rates. The results were catastrophic: Thousands of banks collapsed, wiping out ordinary savers, the money supply shrank by a third between 1930 and 1933, suffocating the economy, and unemployment soared to 25 percent by 1933.

Milton Friedman and Anna Schwartz, in A Monetary History of the United States, laid the blame squarely on the Fed. What might have been a painful but manageable downturn was turned into the Great Depression by central bank error.

The Stagflation of the 1970s

The 1970s brought a toxic mix of oil shocks, high inflation, and weak growth. The Fed, under Arthur Burns, consistently underestimated inflation. Nixon, seeking reelection, demanded easy money. Burns obliged, keeping rates low as prices spiraled upward.

Nixon tried to impose wage and price controls to paper over the problem, but these quickly failed. The result was stagflation — the rare combination of high inflation and high unemployment.

Not until Paul Volcker took the helm in 1979 did the Fed finally act decisively. He raised interest rates to nearly 20 percent. Inflation was crushed, but the cost was a brutal recession in the early 1980s. Years of monetary mismanagement ended only with economic shock therapy.

COVID-19 and the Delayed Response (2020–22)

When the pandemic hit, the Fed slashed rates to zero and launched massive quantitative easing. This was a reasonable emergency response to financial panic.

The mistake came later. By 2021, the economy was reopening, demand was rebounding, and supply chains were snarled. Inflation was clearly accelerating — CPI climbed past 4 percent, well above the Fed’s 2 percent target. Markets and academics alike warned that action was needed. But the Fed insisted inflation was “transitory,” a temporary bottleneck.

The Fed’s inaction let inflation run wild. By mid-2022, CPI peaked at 9 percent, the highest in 40 years. Forced into a corner, the Fed hiked rates from zero to over 5 percent in little more than a year. Mortgage rates skyrocketed, business borrowing dried up, and in 2023, Silicon Valley Bank collapsed under the weight of devalued long-term bonds.

It was a case study in policy whiplash: reckless easing followed by brutal tightening. All because the Fed clung too long to a flawed forecast.

So where does this leave us?

First, the president absolutely has the right to comment on and even attempt to influence the Fed. Far from being a constitutional crisis, it is a normal part of democratic accountability.

Second, the Fed’s independence does not make it infallible. Its track record — from the Great Depression, to stagflation, to its pandemic misjudgments — shows that even the most “independent” experts can be disastrously wrong.

The real danger is not that a president criticizes the Fed. The danger is that the Fed becomes untouchable — an institution worshiped as if its models and forecasts were above human error. In a republic, no institution deserves such deference. Even the “independent” central bank must remain subject to scrutiny, criticism, and the voices of the people’s representatives.

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Shaomin Li is a professor of international business at Old Dominion University.