Why Fed chair Jerome Powell had to say no

THERE is no direct precedent for the US Department of Justice’s (DOJ) threat of a criminal indictment of Federal Reserve chair Jerome Powell, or his public rebuke of it.

But as Mark Twain supposedly observed, though history doesn’t repeat itself, it often rhymes. In fact, two historical episodes offer insight into the current stand-off and the future of Fed independence.

The first began in January 75 years ago. With annualised inflation on track to surpass 12 per cent in the first quarter of 1951, the Fed was under pressure to raise interest rates.