Janet Yellen Stands Up For Fed's Autonomy As Trump Allies Plan To Gain More Control

In the face of attempts by allies of former President Donald Trump to undermine the Federal Reserve’s political independence, Treasury Secretary Janet Yellen is stepping up to defend it.

What Happened: Yellen, who previously served as the Fed chair, is set to deliver a speech at the McCain Institute's Sedona Forum on Friday, Politico reported on Wednesday. She will underscore the crucial role of the Fed’s autonomy in fostering financial stability and driving economic growth.

"As Chair of the Federal Reserve, I insisted on the Fed's independence and transparency because I believe it matters for financial stability and economic growth," Yellen plans to say, according to excerpts of the speech released by the Treasury Department.

"Recent research has been consistent with my belief: It has shown that greater central bank independence is associated with greater price stability, which contributes significantly to long-term growth." 

Yellen’s move comes amid reports that Trump’s allies are exploring ways to curtail the Fed’s independence and bolster the White House’s control over the central bank.

See Also: Is Hawkish Shift On Inflation Imminent? Wall Street Analysts, Traders Brace For Fed Impact

Trump, during his presidency, departed from the customary practice of presidents avoiding public commentary on the Fed’s monetary policy decisions. He openly chastised Fed officials and Chair Jerome Powell, blaming them for stunting economic growth by keeping interest rates high.

Yellen’s address will also touch upon the repercussions of attacks on democracy, such as the Jan. 6 Capitol riot, on the country’s economic well-being. She contends that any attempt to undermine democracy poses a threat to sustainable and inclusive growth.

Why It Matters: Trump’s supporters have been devising plans that could disrupt the independence of the Federal Reserve, should Trump be re-elected. This includes a controversial proposal that the president should have a say in setting interest rates.

Earlier, Trump was presented with a list of potential candidates to replace Powell as the head of the Federal Reserve. This move was seen as an attempt to increase the White House’s control over the central bank.

Recently, the Federal Reserve decided to maintain the federal funds rate at 5.25% to 5.5%.

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