ECB’s Villeroy Blasts ‘Serious Regressions’ Of Trump Fed Attacks

Bank of France Governor Francois Villeroy de Galhau joined a chorus of global policymakers sounding the alarm over White House attacks on the Federal Reserve.

“We Europeans must defend the independence of central banks in the face of the serious regressions of the Trump administration,” he said in Vienna on Wednesday.

Central bankers have been rallying behind the Fed and its chair, Jerome Powell, after a spate of attempts by Donald Trump to pressure the institution into cutting interest rates.

Last week, the US president escalated the standoff by moving to oust Governor Lisa Cook from the board following allegations that she falsified mortgage documents. She denies that accusation.

“Independence is not an obstacle to reasonably low interest rates,” said Villeroy, who serves on the Governing Council of the European Central Bank. “On the contrary, it is a prerequisite for them, as it allows inflation to be controlled in the long term and anchors the expectations of economic agents.”

Speaking at an event honoring Austria’s Robert Holzmann — who just retired as his country’s top central banker — Villeroy added that the threat to the Fed has wider implications.

“Independence has been conferred by democracy, and it is attacking this independence in contradiction with American law that is dangerous for democracy,” he said.

Earlier on Wednesday, Bank of England Governor Andrew Bailey used similar language in his most pointed defense yet of the Fed.

“It has built up a very strong reputation for independence and for its decision-making, so this is very concerning,” he told Parliament’s Treasury Committee. “I just think that is a very dangerous road to go down.”

Source: Bloomberg Europe