A measure of presidential pressure on the Federal Reserve
Yosef Bonaparte develops the Fed–President Pressure Index (FPPI), a monthly measure of presidential pressure on the Fed from 1980 to 2025.
- The FPPI is constructed from 68,850 newspaper articles from major U.S. outlets including the Wall Street Journal, New York Times, and Associated Press. Articles are selected using Boolean logic that simultaneously identifies mentions of the Fed or its Chair, the President or White House, and conflict-related terms (“pressure,” “criticize,” “clash,” “oppose,” “disagree”).
- Monthly article counts are normalized by outlet size and aggregated into a composite index, then validated against historical pressure episodes documented by Weis (2012) during the Great Inflation and cross-checked with FOMC minutes.
Findings
- Trend and political cycles
FPPI shows a clear upward trend since 1980, with much higher levels and volatility after 2000. Pressure is systematically higher under Republican presidents: the index peaks under Trump and is elevated under George W. Bush and Biden. Finally, FPPI is lowest under Volcker and highest under Yellen and Powell. - Effects on FOMC voting
Higher FPPI is associated with more unanimous and cohesive FOMC votes, suggesting that presidential pressure tends to unite the Committee behind the Chair rather than producing visible dissent. On the other hand, higher FPPI increases Economic Policy Uncertainty (EPU) and modestly raises monetary policy uncertainty but has only small and mostly marginal effects on expected inflation and CPI forecast disagreement. - Effects on interest rates
A higher FPPI leads the Fed to set lower future short-term interest rates: a one standard deviation increase in FPPI lowers the target fed funds rate by roughly 3–6%, and reduces 1–3 month ahead federal funds effective rate by about 5.1–12.8% . This implies presidential pressure does push policy rates down in an economically meaningful way. - Effects on stock markets
FPPI has a positive effect on stock returns, especially for small-cap and mid-cap stocks, while effects on large caps are weak. Its impact on overall market volatility is limited; the only robust volatility effect is a small increase in small-cap volatility, whereas inflation is the dominant driver of volatility across portfolios.
Independence Under Pressure: Quantifying Presidential Influence on the Federal Reserve
Author: Yosef Bonaparte
From: University of Colorado at Denver
Can strategic communication mitigates partisan biases?
Pei Kuang, Michael Weber, and Shihan Xie conducted a large-scale survey experiment with over 5,600 U.S. participants on President Trump’s 2025 inauguration day to examine how political polarization affects public trust in the Fed and macroeconomic expectations. The study introduces a multi-dimensional measure of perceived Fed independence across five dimensions: quasi-constitutional, institutional, personal, financial/economic, and tolerance for debt monetization.
- Participants were first surveyed about their political affiliation, perception of the Fed’s political leaning (categorized as “in-group,” “out-group,” or neutral), trust in the Fed, and baseline expectations for inflation, unemployment, and interest rates.
- They were then randomly assigned to either a control group or one of three treatment groups receiving different Fed communication interventions designed to inform respondents about the Fed’s institutional structure (14-year staggered terms, bipartisan FOMC composition), nonpartisan objectives (dual mandate serving all Americans), or recent performance (post-COVID inflation management).
- All participants subsequently read an identical FOMC news article about the economy, and researchers measured how treatments affected perceived reliability of Fed communications and how participants updated their macroeconomic expectations. A one-week follow-up survey assessed treatment persistence on perceptions of Fed neutrality, trust, and independence while minimizing demand effects.
Findings
- Political alignment fundamentally shapes Fed perceptions: individuals viewing the Fed as “in-group” rate it as significantly more independent and trustworthy; those seeing it as “out-group” assign the lowest independence scores.
- Greater perceived independence and trust correlate with lower inflation expectations, reduced uncertainty, and lower perceived inflation targets, demonstrating that partisan biases in Fed credibility directly shape macroeconomic expectations.
- Targeted Fed communication interventions successfully mitigate perception biases: all three treatments significantly increased the probability that respondents perceived the Fed as politically neutral.
- When updating expectations after reading Fed communications, respondents in treatment groups placed significantly greater weight on the Fed’s message, particularly for long-term inflation and interest rates, with performance-based messaging proving most effective.
- Treatment effects persisted one week later, indicating genuine attitude shifts rather than transient responses.
Central Bank Communication with the Polarized Public
Authors: Pei Kuang, Michael Weber, Shihan Xie
From: University of Birmingham, University of Birmingham, University of Illinois at Urbana-Champaign
