Jay Powell may defend Fed freedom: deVere CEO
One of the nation’s leading financial consulting organizations, deVere Group, warns Federal Reserve Chair Jay Powell that as he testifies before Congress this year, he may make an unwavering case for the main company’s freedom.
Nigel Green, CEO of deVere Group, says:” Industry and investors need total clearness from Powell that the Federal Reserve did not bow to social pressure.
” If the Fed is seen as losing its freedom, we may notice increased uncertainty, money trip, and a strengthening money.”
Powell’s evidence comes at a crucial moment, as the connection between the leader and the central bank is closely watched for the president’s administration. His past clashes with Powell over level decisions—and the potential for immediate intervention—have heightened investment issues.
” The Fed’s major mandates—price steadiness and utmost employment—require long-term, data-driven decision-making, free from political disturbance,” continues Nigel Green.
” A socially affected Fed dangers higher prices, asset bubbles, and long-term financial instability.”
Investor trust is impacted by the Federal Reserve’s ability to regulate interest rates separately. When economic policy appears to be dictated by social considerations more than economic fundamentals, markets react adversely.
” If traders believe the Fed is no longer working individually, the consequences may be intense, “warns the deVere CEO.
” We would assuredly discover bond yields spike, chance premiums on US assets rise, and international market uncertainty increase.”
During his first term, Powell had previously resisted Trump’s political pressure, declining to lower rates further in 2019. Investors are seeking reassurances that Powell will continue to fight the Fed’s autonomy now that Trump is back in office despite growing political pressure.
Any notion of political interference in central bank policy is particularly sensitive to the volatility of the financial markets. History has shown that when governments attempt to manipulate monetary policy for the sake of quick political gains, the outcomes can be disastrous. Hyperinflation, unsustainable credit booms, and loss of investor confidence are frequent outcomes when central banks lack independence.
” The US dollar’s role as the world’s primary reserve currency is built on trust in the Fed’s ability to make independent, sound decisions, “notes Nigel Green.
” Any erosion of that trust would not only affect domestic markets but would also have far-reaching global consequences, impacting trade, capital flows, and geopolitical stability.”
With inflation still running above the Fed’s 2 % target, the central bank’s policy decisions over the coming months will be critical.
” An independent Fed is a cornerstone of economic stability,” concludes Green”. Powell must make a strong, clear declaration that the Fed won’t be influenced by political short-term goals. Investors and markets are watching closely, “he concludes.
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Jay Powell may defend Fed freedom: deVere CEO
