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Donald Trump has hit out at the JP Morgan boss Jamie Dimon, saying the Wall Street executive was wrong to suggest he was undermining the independence of the Federal Reserve.
The US president and his administration have come under fire for their attacks against the Fed’s chair, Jerome Powell, who is now facing a criminal investigation by the US Department of Justice over alleged “abuse of taxpayer dollars” linked to renovations to the central bank’s headquarters in Washington.
Powell has suggested the allegations are baseless and merely a punishment for not cutting interest rates as fast as Trump would like. Central bankers and chief executives have since started rallying around the Fed, raising concerns about political interference in monetary policy.
However, Trump defended his campaign against Powell on Tuesday, saying: “I think it’s fine what I’m doing. And we have a bad Fed person.”
When asked about the comments by Dimon, who warned against chipping away at the Fed’s independence, Trump said: “I think he’s wrong.
“We should have lower [interest] rates. Jamie Dimon probably wants higher rates, maybe he makes more money that way.”
Trump also said on Tuesday that he would continue with the plans to announce a replacement for Powell, whom he appointed in 2018, within “the next few weeks”, during a factory tour in Michigan.
It came hours after Dimon told reporters that he had “enormous respect” for Powell, adding: “Everyone we know believes in Fed independence.
“And anything [that] chips away at that is probably not a great idea, and in my view, will have the reverse consequences. It’ll raise inflation expectations and probably increase [interest] rates over time.”
The chief executive of the Bank of New York Mellon, Robin Vince, also warned that there would be consequences to threatening the Fed’s independence.
“Independent central banks with the ability to independently set monetary policy in the long-term interests of the nation is a pretty well-established thing that we’ve seen all around the world over a very long period of time,” Vince told reporters on Tuesday, according to Reuters.
“Let’s not shake the foundation of the bond market and potentially do something that could cause interest rates to actually get pushed up because somehow there’s lack of confidence in the Fed’s independence.”
It emerged overnight that Powell had written to US senators last July with details about the Federal Reserve’s $2.5bn (£1.9bn) renovation project, with the Financial Times suggesting this complicated the Trump administration’s claims that the central bank boss had misled Congress over the scale of the renovations.
