Former Federal Reserve Chair Janet Yellen is accusing President Donald Trump of being ignorant when it comes to macroeconomics and the central bank’s mission, according to an interview with Marketplace published Monday.
“Do you think the president has a grasp of macroeconomic policy?” Marketplace’s Kai Ryssdal asked Yellen.
“No, I do not,” she replied.
Trump, who did not offer Yellen a second term as Fed chief, has repeatedly railed against the central bank for raising interest rates, rankling critics who say the president should respect the Fed’s independence. Trump has also attacked U.S. trade partnerships as unfair, and has waged a tariff war against China, to the economic detriment of some of his most ardent supporters in the farming and manufacturing communities.
Yellen said that though she finds the country’s economy to be largely healthy, she is concerned Trump has little understanding of basic macroeconomics or even what the Federal Reserve is mandated by Congress to do.
“I doubt that he would even be able to say that the Fed’s goals are maximum employment and price stability, which is the goals that Congress have assigned to the Fed,” Yellen, who was replaced by Jerome Powell last year, said in the Marketplace interview. “He’s made comments about the Fed having an exchange rate objective in order to support his trade plans, or possibly targeting the U.S. balance of trade. And, you know, I think comments like that shows a lack of understanding of the impact of the Fed on the economy, and appropriate policy goals.”
Against Trump’s urging, Powell raised rates in December — a vote of confidence in the country’s economic health — leading to rumors the president may oust another Fed chair. At the time, Trump expressed remorse for appointing Powell, reflecting his prioritization of loyalty among those in his circle.
Yellen said she feared those public clashes could decrease confidence in the Federal Reserve if they were to continue, though Yellen said she does not believe Trump’s comments in December alone have had a substantially negative impact.
“President Trump’s comments about Chair Powell and about the Fed do concern me, because if that becomes concerted, I think it does have the impact, especially if conditions in the U.S. for any reason were to deteriorate, it could undermine confidence in the Fed. And I think that that would be a bad thing,” she said.
Article originally published on POLITICO Magazine
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