The Federal Reserve cannot automatically assume that politicians will leave it alone, Chairman Jerome Powell said Friday.
With trust in government and public institutions at historic lows, Powell said at an event in Stockholm, “Central banks cannot take our measure of independence for granted.”
The central banker acknowledged that the Fed’s bailouts and emergency efforts to stabilize the financial system in the wake of the 2008 crisis likely contributed to the decline in the public’s confidence in its management.
New questions about the Fed’s independence have arisen during President Trump’s tenure, in part because of Trump’s willingness to comment directly on the Fed’s monetary policy actions, unlike his predecessors.
In Powell’s prepared remarks, he said that the Fed must pursue transparency in its efforts to regulate the financial system.
As it continues to implement the post-crisis rules and write new rules to keep up with innovation in the financial sector, Powell said, the Fed will have to act transparently and with accountability to maintain “democratic legitimacy.”
