Why the Fed Should Ignore Election Timing

At the Jackson Hole gathering last month, many eyes were on Kevin Warsh as he gave his first talk at the Fed's yearly meeting. Meanwhile, the big question on everyone's mind was what the Fed would do with interest rates the following week. Kenneth Rogoff, a Harvard economist who spoke at lunch, told a New York Times reporter that postponing the rate move until after the midterm elections might help the institution. He wondered, with President Trump attacking the Fed, whether standing up to him or staying quiet until winter would better protect the Fed's independence.

Rogoff once argued, in a 1983 paper, that a central bank chief who dislikes inflation more than the average person can boost credibility. His simple model showed that this extra credibility lowers expected inflation and, in turn, actual inflation. Though details can be debated, the paper is seen as an early step in explaining why central bank trust matters. Today Rogoff might say his old model didn't imagine a president threatening to fire the Fed chair or trying to oust governors. He could argue that when the institution's survival is at stake, thinking about politics makes sense.

But the data tell a different story. Looking at any two-month stretch from 1984 to 2024, the Fed altered its target about 45 percent of the time. In the two months before a federal election—midterm or presidential—the change happened roughly 43 percent of the time. So there is no clear link between election timing and policy shifts. More recently, the Fed raised rates just before the 2022 midterms and lowered them ahead of the 2024 vote. A broader study finds no sign of monetary manipulation. The only notable exception is the Arthur Burns Fed, which backed Nixon's re-election and was later linked to higher inflation—a case of what to avoid. The Fed was created by Congress to withstand political pressure. This year the Supreme Court stopped Trump's attempt to remove Governor Lisa Cook, even while allowing him to dismiss heads of other agencies. Still, the Fed faced challenges: Michael Barr quit as vice chair for supervision in early 2025 to dodge a White House fight, the effort to fire Cook resurfaced later that summer, and the Department of Justice opened an investigation into then-Chair Jerome Powell in early 2026.

Rogoff, who has been a chess master since 1978, knows that delaying past November only emboldens a future push for more control in December. The Fed does not need to hike or cut just to prove it is independent of the White House. My suggestion: ignore the election calendar and concentrate on the economy. Let the rate decision reflect the full range of data and the outlook for risks. Whether the Fed holds steady or moves, the choice should rest on economic conditions, not on the date of the next vote.