Bank of England governor Mark Carney has “full confidence” in the independence of the US Federal Reserve, despite rising political pressure on the central bank.
Carney appeared before the UK parliament’s Treasury Select Committee on Wednesday. He was asked by MPs whether he worried about the independence of the Fed and other central banks around the world.
“I have full confidence in the case that you mentioned [the Fed] that they will conduct a policy that is, in their judgment, the best policy to achieve their dual mandate,” Carney said, “and the timing of any policy changes, or the degree of any policy changes, will be entirely determined by how they can, in their judgment, best achieve their dual mandate.”
Carney said he had discussed the issue of central bank independence with colleagues but it has “not been a central issue to the credit of the system here.”
“I don’t think monetary policy is being politicised here in the UK,” Carney said.
The line of questioning comes after rising pressure on US Federal Reserve chairman Jerome Powell from US President Donald Trump. Trump has repeatedly criticised Powell for not lowering US interest rates and has reportedly looked into demoting him.
Powell said Tuesday afternoon that the Fed is “insulated” from short-term political pressure. He said: “Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests.”
Markets expect Powell to cut rates later this year. The Fed chairman warned on Tuesday that the global growth outlook had worsened since the last monetary policy update.
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.