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Yellen rejects Trump charges that Fed plays politics

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Federal Reserve Chair Janet Yellen on Wednesday rebuffed accusations from presidential candidate Donald Trump that the Fed plays politics with its interest rate policy.

[WASHINGTON] Federal Reserve Chair Janet Yellen on Wednesday rebuffed accusations from presidential candidate Donald Trump that the Fed plays politics with its interest rate policy.

"I can say emphatically that partisan politics plays no role in our decisions," Ms Yellen said, after the Fed decided to leave interest rates unchanged.

"We do not discuss politics at our meetings and we do not take politics into account in our decisions." Last week, Republican White House nominee Mr Trump charged that Ms Yellen was suppressing interest rates to bolster President Barack Obama's popularity.

"It's staying at zero because she's obviously political and she's doing what Obama wants her to do. I know that's not supposed to be the way it is but that's why it's low," Mr Trump said.

He alleged that the Fed was leaving the painful task of raising rates to the next president.

He also said low rates were creating a "false market" and that stock markets were likely to drop sharply once rates eventually do go up.

"The new person who becomes president, let him raise interest rates or her raise interest rates and watch what happens to the stock market when that happens," Mr Trump said.

Speaking at a press conference, Ms Yellen stressed that the Fed steers clear of politics - even with the looming presidential election.

"I want to lead an institution that is not political," she said, adding that there will be no sign of political motivation in the transcripts of Fed policy meetings, which are normally released only after five years.

By statute, the Fed is an independent body intended to be shielded from political pressure and whose operations are not funded by the US Congress.

But Fed governors are nominated by the White House and approved by the Senate.

AFP