The head of the US central bank has defended it against accusations from Republican presidential candidate Donald Trump.
He has said Federal Reserve Chair Janet Yellen has been manipulating financial markets by keeping the cost of borrowing low in order to benefit President Barack Obama.
Yellen, speaking after Fed policymakers left interest rates unchanged at their latest meeting, dismissed Trump’s comments: “The Federal Reserve is not politically compromised. We do not discuss politics in our meetings. I can’t recall any meeting that I’ve ever attended where politics has been a matter of discussion.”
Trump has repeatedly accused Obama of doing a poor job of running the US economy even as it has recovered from the recession.
At a campaign rally in Ohio, held at about the same time the Federal Reserve was wrapping up its two day meeting, Trump said: “My economic agenda can be summed up in three very beautiful words, jobs, jobs, jobs. We have to bring our jobs back.”
In fact, with Obama in the White House US employers have created an average of 216,000 jobs every month in the year up to August.
Trump, and those around him, point to the fact that Yellen was in charge of President Bill Clinton’s Council of Economic Advisers for two years as evidence that she is biased in favour of Hillary Clinton.
Yellen has insisted she – and the Fed – are neutral: “I want to lead an institution that is not political, and that we are striving to do our very best to pursue the goals that Congress has assigned to us, which are important ones of price stability and maximum employment.”
In early September, the Democrat candidate criticised Trump for talking about the Federal Reserve: “You should not be commenting on Fed actions when you are either running for president or you are president,” Clinton told reporters on her campaign plane. “Words have consequences. Words move markets. Words can be misinterpreted.”
And indeed Yellen cannot deny that the Fed’s actions often do have significant political consequences, which could be another reason why the central bank is likely to stay on the sidelines re interest rates until after November’s election.
On Wednesday, after the central bank’s latest policy statement, she did say US growth was looking stronger and rate increases would be needed to keep the economy from overheating and fueling high inflation.
She added she expected one rate increase this year if the job market continued to improve and major new risks did not arise.