Bank of England Governor Warns of Threats to Federal Reserve Independence

The Bank of England's Governor has expressed "high concern" over the threats to the independence of the Federal Reserve, describing it as a "very serious" issue. The Governor was questioned by the Treasury Committee about the 's attempts to pressure the Federal Reserve to lower interest rates. The had publicly discussed firing the Federal Reserve Chairman and had attempted to remove a Federal Reserve Governor, which sparked a critical legal test regarding the Federal Reserve's ability to operate without political interference.

The Governor emphasized the importance of central bank independence, stating that it is a "very dangerous path" to trade central bank independence for support in other government decisions. The Governor also highlighted that monetary and financial stability are the foundations of policy, and that only by ensuring these can the government and parliament make decisions in their respective areas of responsibility.

In response to the 's attempts to remove a Federal Reserve Governor, a Federal Reserve Governor stated that the independence of the Federal Reserve is crucial to its operations. The Governor also noted that the Federal Reserve has the flexibility to adjust the pace of interest rate cuts in the future, and that the current interest rate may be higher than the "neutral" level by 1.0 to 1.5 percentage points. The Governor also acknowledged that tariffs are essentially taxes on consumers and can slow economic growth, but did not see signs of an economic recession in their economic forecasts.

The next Federal Reserve policy meeting is scheduled for September 16-17. The Governor reiterated the importance of the Federal Reserve's independence and stated that whoever is in charge of the Federal Reserve, the central bank will maintain its independence and act in a non-political manner.