Trump's probe of Fed Chair Powell sparks bipartisan backlash
The Trump administration's opening of a criminal probe of Fed Chair Jerome Powell drew fire from the Fed chief, who called the move a "pretext" to win influence over interest rates, and condemnation from former Fed chiefs and key members of Trump's Republican Party, even as House Speaker Mike Johnson said he'd let the process "play out."
The Justice Department's threat of indictment, ostensibly focused on comments Powell made to Congress about a building renovation project, also sent rates on longer-term US Treasury bonds up, as investors parsed what a less independent Fed could mean for inflation and monetary policy, News.Az reports, citing foreign media.
The independence of central banks, at least in setting rates in order to control inflation, is considered a central tenet of robust economic policy, insulating monetary policymakers from short-term political considerations and allowing them to focus on longer-term efforts to keep prices relatively stable.
On Monday, former Fed chairs Janet Yellen, Ben Bernanke and Alan Greenspan joined with former government economic policy leaders from both political parties in raising the alarm.
"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," they wrote. Global central bankers including the chiefs of the French and Canadian central banks publicly offered solidarity.
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