Former Fed Chair Janet Yellen Says Trump Criticism Damaging, Unwise
Former Federal Reserve Chair Janet Yellen spoke out against President Donald Trump’s latest attacks on the Fed for rising interest rates, saying it’s “not a desirable thing for a president to comment so explicitly on Fed policy.”
“To politicize it and to undermine that is something that is essentially damaging to the Fed and to financial stability.”
Yellen, who stepped down after four years as Fed chair earlier this year, spoke Monday morning at a banking forum in Washington.
“To politicize it and to undermine that is something that is essentially damaging to the Fed and to financial stability,” Yellen said. “Obviously, presidents can speak out if they choose to and give their opinions about policy. There’s no law against that, but I don’t think it’s wise and I do think the Fed has a strong reputation for acting in an independent and non-political way and I would not like to see that reputation damaged.”
Trump has frequently complained about the Fed raising its benchmark interest rate, which saw a .25 percent increase in September to 2.25 percent. The Fed has signaled it plans to raise the rate again in December, and three more times in 2019.
“It’s a correction that I think is caused by the Federal Reserve with interest rates,” Trump said last week when asked by reporters in the Oval Office about the stock market swoon. “We have interest rates going up at a clip that’s much faster than certainly a lot of people, including myself, would have anticipated. I think the Fed is out of control.”
It was just the latest in a barrage of criticism the president has aimed at the Fed and current chair Jerome Powell, who has said criticism won’t affect the central bank’s policies. Powell has been gradually raising the rate as the economy has strengthened to help stave off inflation.
Trump however did say he doesn’t plan on firing Powell.
“No, I’m not going to fire him,” Trump said. “I’m just disappointed at the clip” that rates are being raised.
Yellen said she doesn’t believe Trump’s comments will change the direction of what the Fed is doing. She also weighed in on the current state of the economy, saying 3 percent growth in the U.S. is “terrific,” though she doesn’t believe it is sustainable.