- Carlos Barria/Reuters
- Federal Reserve Chairman Jerome Powell stressed the importance of independent monetary policy on Friday.
- That came hours after President Donald Trump lashed out at the central bank in a series of particularly harsh tweets.
- An independent central bank is seen as crucial for the health of financial markets and the economy.
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Federal Reserve Chairman Jerome Powell stressed the importance of independent monetary policy on Friday, hours after President Donald Trump lashed out at the central bank in a series of particularly harsh tweets.
“Political factors play absolutely no role in our process, and my colleagues and I would not tolerate any attempt to include them in our decision-making or our discussions,” Powell said at a question and answer session in Zurich, Switzerland. “We’re strongly committed to nonpolitical decision-making. We serve all Americans, regardless of their political party.”
The comments followed weeks of heightened political pressure on the central bank. Trump has increasingly sought to shift blame away from his trade policies since a key recession indicator flashed last month. His plans to raise tariffs on thousands of products from China has added to concerns about growth and roiled stocks.
“The Fed should lower rates,” the president wrote on Twitter. “They were WAY too early to raise, and Way too late to cut – and big dose quantitative tightening didn’t exactly help either. Where did I find this guy Jerome? Oh well, you can’t win them all!”
The former president of the Federal Reserve Bank of New York, Bill Dudley, left experts shocked last month after he said the central bank should take the Trump re-election campaign into account as they set interest rates.
“Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks – including the risk of losing the next election,” Dudley wrote in a Bloomberg op-ed.
Dudley has since walked back those comments, but not before they sparked further concerns about political influence on monetary policy. An independent central bank is seen as crucial for the health of financial markets and the economy.