GOP senator calls for probe into Fed's independence
Republican Sen. Thom Tillis is pushing for an investigation into the Federal Reserve’s independence, after a former agency president suggested policymakers should punish President Trump for the U.S.-China trade war by allowing the economy to tank, hurting his 2020 re-election chances.
Tillis, who’s up for re-election next year in the battleground state of North Carolina, threw his weight behind Trump in the president’s ongoing feud with the Fed, and its chairman Jerome Powell.
A member of the Senate Banking Committee, Tillis said he planned to ask the chairman, Sen. Mike Crapo, R-Idaho, to hold a hearing regarding Fed independence.
His call for the probe came one day after former New York Fed President Bill Dudley published an op-ed in Bloomberg News — “The Fed Shouldn’t Enable Donald Trump” — arguing that policymakers need to consider not playing along with Trump’s “manufactured disaster-in-the-making.”
“Central bank officials face a choice: enable the Trump administration to continue down a disastrous path of trade war escalation, or send a clear signal that if the administration does so, the president, not the Fed, will bear the risks — including the risk of losing the next election,” Dudley wrote. “There’s even an argument that the election itself falls within the Fed’s purview.”
Instead, Dudley urged them to withhold cutting interest rates further “making it abundantly clear that Trump will own the consequences of his actions.”
“I am very disappointed that former Fed monetary Vice Chairman Bill Dudley is lobbying the Fed to use its authority as a political weapon against President Trump,” Tillis said in a statement on Wednesday.
Over the past year, Trump has repeatedly attacked Powell, whom he nominated, and the central bank, pressuring policymakers to aggressively cut interest rates while blaming them for wild fluctuations in the stock market.
Federal Reserve board member Jerome Powell speaks after President Donald Trump announced him as his nominee for the next chair of the Federal Reserve in the Rose Garden of the White House in Washington, Thursday, Nov. 2, 2017. (AP Photo/Alex Brandon)
“The only problem we have is Jay Powell and the Fed,” Trump tweeted last week. “He’s like a golfer who can’t putt, has no touch. Big U.S. growth if he does the right thing, BIG CUT — but don’t count on him! So far he has called it wrong, and only let us down.”
Trump’s frequent criticisms have raised concerns about the independence of the Fed — prompting four former chairs to stress, in a Wall Street Journal op-ed, the need for the central bank to remain free of short-term political pressures.
“It is critical to preserve the Federal Reserve’s ability to make decisions based on the best interests of the nation, not the interests of a small group of politicians,” wrote Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen, who have all, at one point, headed the Fed, appointed and reappointed by six different presidents, both Republican and Democratic.