The previous four heads of the Federal Reserve called for an independent central bank in the face of repeated attacks by President Donald Trump in an extraordinary joint commentary for the Wall Street Journal.
"We are united in the conviction that the Fed and its chair must be permitted to act independently and in the best interests of the economy, free of short-term political pressures and, in particular, without the threat of removal or demotion of Fed leaders for political reasons," stated the piece, signed by Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen.
The former leaders of the Fed emphasized that the Fed's powers are appropriately checked by Congress.
And that short term moves called for by politicians, especially around elections, has led to economic calamities. "Monetary policy based on the political (rather than economic) needs of the moment leads to worse economic performance in the long run, including higher inflation and slower growth," it said.
"It is critical to preserve the Federal Reserve's ability to make decisions based on the best interests of the nation, not the interests of a small group of politicians," the piece concludes.
The president has repeatedly lashed out at the U.S. central bank and its chairman Jerome Powell, claiming rising interest rates are putting a brake on his economic plans. He claimed the Fed made a "big mistake" hiking rates in December, and even considered demoting Powell. The central bank raised interest rate four times in 2018.
The Fed cut interest rates for the first time in more than a decade in its July meeting. Two days ahead of the policy decision, Trump took to Twitter advocating for a large reduction in borrowing cost, saying a "small" rate cut would not be enough.
After Powell characterized the rate cut as a "midcycle adjustment," Trump said in a tweet Powell "let us down" by not clearly signaling more rate cuts.
Powell has refused to comment publicly on Trump's criticism and repeatedly emphasized the independence of the Fed. The chief recently said the central bank would never move rates because of political factors or to prove its independence.
— Read the WSJ piece here.