Yellen Says Fed's Independence Is Being Threatened

The video discusses the importance of maintaining independence in monetary policy, highlighting the role of the Monetary Policy Committee and the diversity of opinions it brings. It addresses threats to this independence, such as the 'Audit the Fed' bill and other legislative efforts that could impose strict rules on policy decisions. The video concludes by emphasizing the benefits of a nonpartisan group making these decisions, free from short-term political pressures.

What are the potential consequences of deviating from the proposed mathematical rule in setting interest rates?

Why is it important for the Monetary Policy Committee to be shielded from short-term political pressures?