Federal Reserve Governor Michael Barr stated that the Trump administration's criminal investigation into the Fed and its ongoing attempts to remove Governor Lisa Cook constitute an "attack" on the independence of monetary policy.
Barr said on Thursday, "Chair Powell’s statement on Sunday was clear and direct on this point. This, like the previous attacks on Governor Cook, is an encroachment on the Fed's independence."
Previously, the U.S. Department of Justice issued a subpoena to the Federal Reserve, focusing on the investigation of its headquarters renovation project and Chair Powell's testimony to Congress last year regarding this project. In his Sunday statement, Powell called the renovation issue a "pretext," stating the investigation aims to pressure the central bank into cutting interest rates.
Barr also pointed out that the inflation rate remains "elevated," while the labor market has shown signs of stabilizing. He believes that in this context, policymakers can "pause and watch" because current interest rates are maintained near a neutral level—neither stimulating nor restraining the economy.
"I believe the current policy stance is appropriate," he stated.
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