The independence of the Federal Reserve is vital for preventing political interference that could lead to short-term economic gains at the expense of long-term stability, a concern highlighted by recent pressures from President Trump.

Historically, the Fed's independence was reinforced in the early 1980s by Paul Volcker's tough measures to combat inflation, despite causing a recession and job losses, establishing a precedent for autonomous monetary policy.

The most notable challenge to the Fed's independence occurred in the 1970s under President Nixon, who pressured Chair Arthur Burns to keep interest rates low, resulting in inflation that was later controlled by Volcker's aggressive interest rate hikes in 1979.

According to political scientist Nicolas Jabko, the Fed's independence is crucial for maintaining economic stability both in the U.S. and globally, given its role in managing interest rates and the U.S. dollar as the world’s primary reserve currency.

In recent years, especially under President Trump, there has been an increased challenge to the Fed’s independence, with public pressure on Chair Jay Powell and efforts to influence its leadership, marking a departure from the respect for autonomy shown by past presidents.

Market confidence in the Fed's independence is essential, as doubts about its credibility could lead to higher long-term interest rates, negatively impacting loans, mortgages, and overall economic stability.