ABC News(NEW YORK) — Federal Reserve Chair Janet Yellen defended the independence of the U.S. central bank Wednesday, saying it does not play politics in response to charges from Donald Trump that she is manipulating financial markets to benefit President Obama.
Trump earlier this month said that the Yellen-led Fed is keeping interest rates low in order to give a boost to the stock market in an effort to make Obama’s economic record look good.
“Well, it’s [the interest rate] staying at zero because she’s obviously political and she’s doing what Obama wants her to do,” Trump said in a Sept. 13 interview with CNBC. He added that Yellen should be “ashamed of herself.”
In response to questions about Trump’s comments, Yellen was careful not to mention the GOP presidential campaign by name while making clear she was strongly dismissing his accusations.
“In order to insulate monetary policy from short-term political pressures and I can say, emphatically that partisan politics plays no role in our decisions about the appropriate stance of monetary policy,” Yellen said at a news conference following a gathering of the Fed committee that determines interest rates. “We are trying to decide what the best policy is to foster price stability and maximum employment and to manage the variety of risks that we see is affecting the outlook. We do not discuss politics at our meetings and we do not take politics into account in our decisions.”
The Fed announced Wednesday it will keep interest rates near zero, but suggested a rate hike will happen before the end of the year. Fed officials say they are keeping rates low to aid the economy, which they argue continues to need support, by making loans, such as mortgages, cheaper.
The Fed has been under attack from conservatives, including some in Congress, in recent years because they argue its easy money policies will eventually lead to inflation, hurting the economy. Former Rep. Ron Paul, R-Texas, made criticism of the Fed a central theme of his 2008 and 2012 presidential runs.
Fed Chair Janet Yellen tells @RebeccaJarvis: “The Federal Reserve is not politically compromised” https://t.co/Rozj4rsgd1 pic.twitter.com/wpJgnEP2OF
— ABC News Politics (@ABCPolitics) September 21, 2016
But Trump’s suggestion that Yellen is purposefully keeping rates low as a political favor to Obama goes well beyond that criticism.
The Fed releases transcripts of its rate setting meetings five years after they take place. Yellen said she’s confident when that day arrives Trump’s charge that politics were at play will be disproved.
“I will assure you that you will not find any signs of political motivation when the transcripts are released in five years,” she said. “It is important that we maintain the confidence of the public, and I do believe that we deserve it.”
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