Brett Christophers in The New York Review of Books:
For the past twenty years, central banks have rarely been out of the news. Called upon to stabilize the global financial system when it appeared at risk of collapse during the financial crisis of 2008–2009, the Federal Reserve and its international peers remained in firefighting mode until the mid-2010s, using all the weapons in their arsenal to stimulate economic activity. After a brief respite, the world’s central banks returned to the fore during the coronavirus pandemic of 2020–2021, again being relied on to keep credit flowing and the economy off life support. And no sooner had the virus begun to loosen its grip than central banks were forced to contend with the resurgence of a phenomenon that many commentators appeared to think had been consigned to history, at least in the rich global north: inflation. A surge in retail prices from mid 2021 saw the Fed and other central banks hike interest rates to levels higher than they had been since before the financial crisis. There, more or less, they remain today.
It’s against this backdrop that Donald Trump returned to the White House in January. Nothing if not sensitive to the flow of the American economy, Trump has been keen for the Fed to aggressively lower interest rates now that inflation has eased. As he sees it, this would help sustain the economy’s steady expansion over the past two years, which has arguably been jeopardized by the tariffs that he himself introduced. But thus far the Fed has refused to play ball: it has held rates steady during 2025, having begun cautiously to reduce them last year.
More here.
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