Federal Reserve Chairwoman Janet Yellen on Wednesday dismissed charges from Donald Trump that the central bank is effectively beholden to President Obama.
Yellen fiercely defended the Fed’s political independence while also repeatedly declining to dive deeper into the messy politics of the presidential race.
{mosads}“I can say emphatically that partisan politics play no role in our decisions about the appropriate stance of monetary policy,” she told reporters. “We do not discuss politics at our meetings, and we do not take politics into account in our decisions.”
The Fed chairwoman has faced a barrage of criticism from Trump over the last several days. The GOP nominee has called her “obviously political,” saying the Fed is keeping interest rates low to benefit Obama in his final months in office.
Yellen was appointed the first chairwoman of the Fed by Obama, and he nominated her to serve as vice chair before that. But her time at the Fed predates Obama’s time in office, as she took over the San Francisco Fed in 2004.
Trump himself has previously said that rates should remain low and that Yellen was doing a good job. For her part, Yellen vehemently denied the idea that politics is even a topic of discussion at the Fed.
“The Federal Reserve is not politically compromised,” she said. “I can’t recall any meeting that I have ever attended where politics has been a matter of discussion.
“It is important that we maintain the confidence of the public, and I do believe we deserve it,” she added.
Yellen went so far as to say the Fed is deliberately not considering the outcome of the U.S. presidential race as it sets policy. And she did not rule out whether the Fed could raise interest rates at its next meeting in November, less than a week before Election Day.
“I’m not going to get into politics,” she said. “I’m not going to get involved in commenting on the election.”
Over the last several years, the Fed has found itself in a precarious position when it comes to politics. The central bank is currently facing pressure from both the right and the left. Conservatives, skeptical of Fed policies after the financial crisis, are the primary backers of a push to subject the Fed to strict rules for setting policy and subject its monetary policy decisions to outside review.
Meanwhile, a growing contingent on the left are pushing to reduce the influence of the banking industry, including removing bankers from the boards of regional Fed banks.
While trying to stay out of political fights, Yellen has stepped in to defend the Fed’s current structure from attacks on both sides of the aisle.
On Wednesday, Yellen said Congress should tread lightly when it comes to overhauling the central bank.
“I would simply caution that if [changes are] looked at, as Congress is entitled to, they think through carefully what the ramifications of those changes would be,” she said.
At the same time, the Fed has lightly nudged Congress and the administration to do more on the fiscal policy side to boost the economy, cautioning that there is only so much the Fed can do on its own. Yellen echoed that message again Wednesday.
“There are ways in which the response of fiscal policy to shifts in the economy could be strengthened, which could help take some burden off of monetary policy,” she said.
Yellen’s remarks came after the Fed decided Wednesday that it would again not raise interest rates. After the latest policy meeting by the Federal Open Market Committee, the Fed released a statement saying that while the argument for higher rates had “strengthened,” the Fed still wants to see more economic data before making a move.
The Fed last raised interest rates last December, its first hike in nearly a decade. Many Fed watchers believe the central bank could next raise rates in December, given the fact that three FOMC members dissented from Wednesday’s statement, favoring action now.
Yellen characterized the decision to wait as not a sign of concern about the U.S. economy, but rather a belief that lower rates could still accomplish a bit more.
“Our decision does not reflect a lack of confidence in the economy,” she said. “We’re generally pleased with how the U.S. economy is doing … the economy has a little more room to run than might have been previously thought. That’s good news.”
Yellen did say that most Fed participants expect one interest rate increase before the end of 2016. The Fed has just two policy meetings left this year.