How to hold the Federal Reserve accountable to the public interest
How to hold the Federal Reserve accountable to the public interest
- October 27, 2026
- Erin Lockwood, political science, and coauthors Christian Flores, Ethan Struby explain in this series for the Roosevelt Institute
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“The Federal Reserve, created by Congress in 1913 to strengthen the stability of the American banking system and charged in 1977 with a dual mandate of price stability and maximum employment, shapes how people experience the economy. As we learned in the Great Recession, for too long, the Federal Open Market Committee (FOMC) aligned itself more with the interests of large financial institutions than with everyday Americans. Yet in making monetary policy decisions, the FOMC can put a home loan within reach, make savings go farther, and tighten the labor market, giving workers more power to negotiate with employers.
The Fed, and central banks more generally, are most effective at monetary policy when they are least subject to short-term political influence; so goes a hard-won consensus among economists. This creates a lot of tension in a democratic society: Democratic governments derive their legitimacy from citizen approval, yet they assign power over key drivers of affordability and job creation for ordinary citizens to central banks that are explicitly charged with acting independently of politics.
Beyond its core monetary policymaking, where research shows central bank independence from short-term political influence delivers lower inflation, the Fed has taken on a growing number of functional and regulatory roles in the modern financial system. In these cases, the distance from political accountability that comes with independence has too often made the Fed less effective at delivering an economy that serves all Americans.
Our hope is this collection is the beginning of a more ambitious discussion of reforms to the Federal Reserve system that will deliver not only more accountability to the public and more democratic outcomes but a stronger economy for everyday Americans. This series lays out ideas that must inform a core set of democratic updates to the 21st-century Federal Reserve system’s monetary policy setting authorities, if it’s to perform its core macroeconomic role. These are a baseline set of needed reforms, not the full menu of reforms we need if we are to address the ways in which the Fed’s broader responsibilities are failing to serve the American people.”
Continue reading, courtesy of the Roosevelt Institute.
Read Lockwood’s essay on the Fed’s arbitrary 2 percent inflation target and a more accountable monetary policy online.
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