Treasury-Fed accord restores central bank independence after World War II

The U.S. Treasury and Federal Reserve reached a formal accord on March 4, 1951, ending the Fed's wartime obligation to peg interest rates at artificially low levels to support Treasury bond prices. Fed Chairman William McChesney Martin had negotiated the agreement after Truman's Treasury pressured the Fed to keep rates near zero to finance Korean War spending. The Accord restored the Fed's authority to raise rates to fight inflation and is considered the founding document of modern Federal Reserve independence.