- Janet Yellen, the former Federal Reserve chair, has launched a stinging attack on President Donald Trump, saying his public criticism of the central bank risk undermining “social and economic stability” in the US.
- In an interview with the Financial Times, Yellen said Trump’s repeated criticism could undermine confidence in the Fed, with possibly dire consequences.
- Trump has frequently attacked the Fed, calling its interest-rate hikes “loco” and saying it is the biggest risk to the US economy.
- His opposition to the Fed stems from his dislike of high interest rates.
Former Federal Reserve Chair Janet Yellen has launched a stinging attack on President Donald Trump, warning that his public criticisms of the central bank risk undermining “social and economic stability” in the US.
The Fed is moving away from the ultra-loose monetary policy it carried through the financial crisis, having raised interest rates eight times in the past three years including three times in 2018. Trump, who has a long-standing dislike of high rates, has frequently attacked the central bank and its current chairman, Jerome Powell, in recent months.
Most recently, Trump criticized the central bank during an interview with The Wall Street Journal this week, bashing Powell and attacking the Fed as the “biggest risk” to the US economy. He has previously said the central bank “has gone crazy” and called its interest-rate hikes “loco.”
Speaking with the Financial Times, Yellen made clear her opposition to Trump’s position, saying she thought such an approach had “the potential to undermine confidence in the institution.”
She added that Trump’s criticisms were “whittling away the legitimacy and stature of institutions the public has traditionally had some confidence in.”
“I feel it ultimately undermines social and economic stability,” she said.
This applies not just to the Fed, Yellen said, but also to other major public institutions like the FBI, which Trump has also subjected to frequent vociferous criticisms during his time in the White House.
“If the public has lost confidence in the Fed in a serious way, that will be reflected presumably in congressional actions towards the Fed,” she added, suggesting that Federal Reserve independence could be at stake.
“To totally undermine these institutions that are assets to the United States and the globe is worrisome,” she said.
Yellen left her post as Fed chair at the beginning of 2018 after serving a four-year term. Prior to Trump’s election many believed that she would be granted a second term, but Trump decided to replace her.
Yellen told the Financial Times she thought Trump briefly considered keeping her on at the helm of the central bank. “I have some reason to believe he wondered if it might be a mistake to replace me after meeting with me,” she said.
“I think when I walked out of that interview he thought to himself, ‘Gee, she is really good and I really like her.'”