Everything on Institutional Risk

Public political interference, including attempts to remove Fed governors, has eroded the perception of central bank independence. This erosion is directly linked to market volatility and higher risk premiums in financial assets.

Impact: Loss of independence increases the cost of capital for the entire economy, as investors demand higher compensation for political risk associated with monetary policy decisions.

— from Fed Leadership Transition and Market Credibility Risks · The Indicator from Planet Money· Feb 02, 2026