Washington's Last Bastion of Nonpartisanship.

• Author: Ullmann, Owen

But did the Fed staff receive the news?

The bitter partisan polarization gripping the United States is acting like a virus that has infected government institutions designed to avoid such schisms so they would act in the best interests of all citizens. Congress has long been Ground Zero for partisan gridlock, and that affliction has spread to the Supreme Court, whose recent rulings have revealed a sharp ideological divide. Even the FBI, with its fabled "G men," is being accused of partisan bias in the wake of the raid of former President Trump's Mar-A-Lago estate in Florida.

Could the Federal Reserve be next? So far, the nation's central bank has avoided being tarnished as just another partisan government agency. And if it succeeds in tamping down inflation over the next year, even at the cost of a recession, it will retain its reputation as an independent institution driven by economic goals rather than a Democratic or Republican agenda.

Certainly, when it comes to the conduct of monetary policy, there is little evidence of partisan politics driving interest rate decisions. Fed Chair Jerome "Jay" Powell and company are moving aggressively to combat a spike in inflation without regard for the impact on the Biden administration and Congress heading into a critical midterm election. Powell underscored that commitment with a hawkish speech at the Fed's annual Jackson Hole conference on August 26, when he vowed to keep raising rates until inflation is vanquished, though that will entail economic pain.

True, the Fed's interest rate hikes this year at the fastest pace in its history were needed to make up for its slow start in tackling rising inflation. Last year, an egregious staff forecasting error led Powell to assume a jump in prices was "transitory." As a result, the Fed continued stimulating economic growth to ensure the economy was on sturdier legs in the aftermath of the collapse triggered by the Covid-19 pandemic in the spring of 2020.

Now that the anti-inflation campaign is underway, Powell has been encouraged to focus on bringing inflation down by his chief patron and protector in the administration, Treasury Secretary Janet Yellen. As his predecessor in the job, Yellen has counseled the Fed chair to try to ignore the short-term partisan repercussions and aim to restore the economy to healthy growth with price stability. The Treasury secretary worries the job market is too tight to restrain inflation and the Fed will have to push unemployment into the 4 percent-plus range, maybe even to 5 percent, to succeed.

Yellen's views on this matter because she convinced President Biden to re-appoint Powell last fall over opposition from many in the Democratic Party's left wing, and no one in the administration has her clout when it comes to monetary policy.

Powell also has...