'Don't do it': Trump's criticism of central bank could backfire, warns former vice-chair
Stanley Fischer says U.S. president is challenging Federal Reserve's independence
When it comes to U.S. President Donald Trump's criticism of the Federal Reserve for hiking interest rates this year, a former vice-chair of the central bank has one message for him: "Don't do it."
Trump's remarks could backfire on him by encouraging a further rise in interest rates, rather than a decline, Stanley Fischer told The Current's guest host Piya Chattopadhyay
"When you criticize the Fed in the way you do, you challenge its independence," said Fischer. "And when you challenge its independence, it has to demonstrate its independence."
Trump, who personally selected Jerome Powell as chairman of the Fed, has repeatedly lambasted Powell and the central bank this year, at one point calling the Fed "my biggest threat."
The president argues rising interest rates could hurt the stock market, and some investors have been equally wary.
- Trump's attacks on central bank rate hikes risk creating future economic trouble: Don Pittis
- Global dread of rising rates makes stark choice for central bankers: Don Pittis
But Fischer said if Trump continues to attack Powell, the head of the central bank will have to find a way to demonstrate "he will not be shaken by the president."
"We know full well that if if inflation gets out of control, the Fed will be blamed," Fischer said. "And that is one of the things that it has to take into account."
To learn more about the role of the Federal Reserve in the U.S. economy and central banks in general, Chattopadhyay spoke to:
- Stanley Fischer, former vice-chair of the Federal Reserve from 2014-2017, and former governor of the Bank of Israel.
- Livio Di Matteo, professor of economics at Lakehead University.
Click 'listen' near the top of the page to hear the full story.
Written by Kirsten Fenn. With files from CBC News. Produced by Richard Raycraft and Sarah-Joyce Battersby.