A group of prominent economic figures, including former chairs of the Federal Reserve and Secretaries of the Treasury, have released a statement condemning what they describe as an unprecedented attempt to undermine the independence of the Federal Reserve. The statement refers to a reported criminal inquiry into Federal Reserve Chair Jay Powell, arguing that such actions are reminiscent of monetary policy practices in emerging markets with weak institutions. They caution that this could have significantly negative consequences for inflation and the broader functioning of the economy.
The signatories emphasise the critical importance of the Federal Reserve’s independence and the public’s perception of that independence for overall economic performance. They argue that this independence is essential for achieving the goals set by Congress: stable prices, maximum employment, and moderate long-term interest rates. The group asserts that the rule of law, a cornerstone of US economic success, is being challenged by this inquiry.
The statement is signed by notable individuals who have held high-ranking positions in both Democratic and Republican administrations. Signatories include former Federal Reserve chairs Ben S. Bernanke and Alan Greenspan, as well as former Treasury Secretaries Timothy F. Geithner, Jacob J. Lew, Henry M. Paulson, Robert E. Rubin, and Janet Yellen. Janet Yellen currently serves as the 78th Secretary of the Treasury under President Joe Biden. The Federal Reserve System is the central bank of the United States. It conducts monetary policy to manage inflation and promote full employment.
Also among the signatories are Jared Bernstein, Jason Furman, Glenn Hubbard, N. Gregory Mankiw, Christina Romer, and Kenneth Rogoff, all of whom previously chaired the Council of Economic Advisers under various presidents. The collective statement signals deep concern among economic experts regarding the potential ramifications of politicising the Federal Reserve and its leadership.
