Dimon warns: Undermining Fed independence will push interest rates higher

Financial News, New York City — Lee Byung-chulAfter the Donald Trump administration launched a criminal investigation targeting Jerome Hayden Powell, chair of the Federal Reserve System (the Fed), Wall Street and global monetary authorities have moved in quick succession to defend the Fed’s independence. Jamie Dimon, chief executive officer (CEO) of JPMorgan Chase & Co. and widely regarded as one of the most powerful figures in finance, warned that "any attempt to erode central bank independence is not a good idea" and cautioned that pressure from the Trump administration could instead fuel inflation and drive interest rates higher.
Speaking with reporters on the 13th (local time) after JPMorgan’s fourth-quarter earnings release, Dimon referred to the Department of Justice issuing a subpoena to the Fed and said, "Actions that undermine the Fed’s independence are undesirable."
Dimon stressed that political interference in the Fed "could push inflation and interest rates even higher." This stands in direct conflict with President Donald Trump’s long-standing goal of securing interest rate cuts. His remarks came shortly after Jerome Hayden Powell publicly disclosed over the weekend that he is under investigation by the Department of Justice.
Dimon added that "I do not agree with every decision the Fed makes," but said, "I have great respect for Jerome Hayden Powell as a person." Market observers say his comments reaffirmed that even if Wall Street leaders are unhappy with current rate policy, they are likely to defend Powell publicly, at least when it comes to the issue of the Fed’s independence.
President Donald Trump has repeatedly pressured the Fed, arguing that rate cuts would help stimulate the economy and ease the burden of housing costs. The conflict, however, entered a new phase when Powell himself explicitly raised the possibility of criminal charges.
Powell said he feels he is being "persecuted" because he did not cut interest rates to the level President Donald Trump wanted, signaling that the central bank’s monetary policy has effectively become a target of political attacks.
JPMorgan chief financial officer (CFO) Jeremy Barnum also warned the same day that if investors lose confidence in the Fed’s independence, the bigger problem would be damage to the U.S. economic outlook and, frankly, that it could even undermine global economic stability.
Robin Vince, CEO of The Bank of New York Mellon Corporation (BNY Mellon), likewise called the Trump administration’s pressure "counterproductive" and pointed out that "central bank independence is absolutely critical in the bond market." In doing so, Wall Street underscored that the issue of Fed independence is not merely a matter of political debate but a core pillar underpinning confidence in U.S. Treasuries, the dollar, and global financial markets.




pride@fnnews.com Lee Byung-chul Reporter