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Former Fed chairs back its independence after tweets


From left, then-US Federal Reserve Chair Janet Yellen and former Fed chairs Ben Bernanke and Paul Volcker appear together for the first time in New York City on April 7, 2016.

Photo: Reuters

Four former US Federal Reserve chairs on Monday published an essay advocating for the independence of the institution, which has been the target of recent criticism by US President Donald Trump.

Writing in the Wall Street Journal, the four living former chairs — Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen — defended the central bank and Chairman Jerome Powell from Trump’s public criticism.

“We are united in the conviction that the Fed and its chair must be permitted to act independently and in the best interests of the economy, free of short-term political pressures and, in particular, without the threat of removal or demotion of Fed leaders for political reasons,” they wrote.

The essay never named the president directly, despite his long history of antagonism towards both Powell and the bank.

In December last year, he criticized the Fed for raising rates despite signs of a weakening global economy.

He has repeatedly berated the Fed for failing to provide additional juice to the US economy, asserting that if the central bank followed his advice, economic growth would climb substantially from its current rate of 2 percent, and the stock market would rise 10,000 points.

Economists have cast doubt on Trump’s claims, though many agree with the president’s contention that last year’s rate hike was the wrong move.

Fed officials have since backtracked and the bank lowered rates on Wednesday last week for the first time since the Great Recession more than a decade ago.

Yet the move did not satisfy Trump, who on Twitter said it fell short of the “aggressive rate-cutting cycle” he wanted, adding: “As usual, Powell let us down.”

The former Fed chiefs acknowledged in their essay that they and their institution had made mistakes, but said that they believed “those decisions were better for being the product of nonpartisan, nonpolitical assessments based on analysis of the longer-run economic interests of US citizens.”

“The Fed’s nonpartisan status doesn’t mean it is unaccountable,” they wrote.

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