- Thomson Reuters
- Since the start of his reelection campaign, President Donald Trump’s efforts to drive interest rates lower have grown increasingly bold and frequent.
- Now pressure on the central bank has reached an unprecedented point, according to former Fed Chair Janet Yellen.
- “I think this is – to make it so public and so critical of the chair and threatening – I think is a first,” Yellen told Business Insider in a brief interview Wednesday.
- Visit Markets Insider for more stories.
Since the start of his reelection campaign, President Donald Trump’s efforts to drive interest rates lower have grown increasingly bold and frequent.
And now pressure on the central bank has reached an unprecedented point, according to former Fed Chair Janet Yellen.
“There have been other times when chairs have faced pressure,” Yellen told Markets Insider in an exclusive interview on Wednesday. “But I think this is – to make it so public and so critical of the chair and threatening – I think is a first.”
Yellen and three other former Fed leaders warned against the risks of politicized monetary policy in an op-ed in the Wall Street Journal on Monday. The rare joint statement from Yellen, Paul Volcker, Alan Greenspan and Ben Bernanke was seen as a rebuke of efforts by the Trump White House to influence monetary policy.
“There is a great deal of pressure,” Yellen told Markets Insider. “I think that’s clear and that’s what motivated us to write the op-ed.”
The former Fed chairs stressed that governors could only be removed for cause and not for policy differences with political leaders. Bloomberg reported in June that the White House this year looked into whether it could remove current chair Jay Powell, a frequent subject of the president’s ire.
In his latest attack, Trump sought to shift blame for a reeling stock market away from tariff escalations with China and toward the central bank. He could benefit from a juiced economy ahead of the 2020 elections, particularly as his growing trade barriers threaten to upend the longest expansion on record.
“Our problem is not China … Our problem is a Federal Reserve that is too………proud to admit their mistake,” he wrote on Twitter early Wednesday, adding that policymakers “must Cut Rates bigger and faster” and rein in other policies he has long portrayed as a hindrance to growth.
That was just the latest in a long string of attacks on the Fed, which operates independent from the White House. In just the past week, Trump has lambasted interest-rate levels more than a dozen times.
The president has also attempted to install political allies at the top of the central bank. But facing an uphill battle in the Senate, two of his intended nominees withdrew from contention within a matter of weeks this year.
Trump announced last month he would nominate his former campaign adviser Judy Shelton, who is a staunch supporter of lower interest rates and policies outside of mainstream economics.
Yellen declined to comment on that nomination directly. But she stressed that anyone who is appointed to the Fed should behave in a nonpartisan fashion and make monetary policy decisions based on merits outlined in the congressional mandate.
“It’s the job of the Senate to make sure nominees ascribe to that principle,” Yellen said. “And to appoint individuals who intend to make politically based decisions really is undermining the independence of the Fed.”
Read more: Trump just tapped former economic adviser Judy Shelton for a Federal Reserve seat. She’s a fierce critic of the central bank who sees a gray area on its independence from the administration.