Closing post
Our US politics liveblog is taking up the coverage of the Federal Reserve, here:
Here’s a wrap up….
The worsening relations between the US Federal Reserve and the White House have triggered fears that the independence of America’s central bank is being threatened.
Last night, Fed chair Jerome Powell revealed that the Department of Justice had served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to his testimony before the Senate Banking Committee last June. The probe relates to the renevation of Fed buildings.
Every living former head of the Federal Reserve condemned the “unprecedented” bid by the Trump administration to weaken the central bank’s independence.
Goldman Sachs’ chief economist Jan Hatziuse captured the concerns of investors about the move, saying:
“Obviously there are more concerns that Fed independence is going to be under the gun, with the latest news on the criminal investigation into Chair Powell really having reinforced those concerns.”
Those worries have pushed the dollar down today; it has lost 0.35% against a basket of other currencies.
This helped to push gold to a new record high over $4,600 an ounce today.
The Senate banking committee’s top Democrat – Elizabeth Warren – has urged her colleagues not to move forward with the president’s nominee for the role when Powell’s term expires in May.
Ex-Fed chairs condemn Trump administration’s bid to weaken central bank
Every living former head of the Federal Reserve has condemned an “unprecedented” bid by the Trump administration to weaken the central bank’s independence, after the Department of Justice opened a criminal investigation into its chair Jerome Powell.
Ex-Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen warned similar prosecutorial attacks in other countries have led to “highly negative consequences” for the cost of living – and argued they had “no place” in the US.
They wrote:
“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” a blunt statement signed by 13 former senior officials said. “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly.
“It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
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