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Goldman Sachs examined the risks of a new report of economists, the risk of violating the independence of central banks and the release of political intervention in monetary policy.
The report concluded that this could cause inflation, reduce stock prices and a weak currency.
Goldman Sachs, the economists led by Jean Hatzius, were investigating the independence of the world’s central banks: “Economic commentators are more political in terms of more political speech, protect their goal and stable prices while maintaining economic access in full potential.”
Among the risks caused by the independence of the Central Banks in the report, “the independence of the United States is a public political pressure that can exceed the public’s perception.” Other risks include legal changes that allow the removal of federal reserve officials, as well as real efforts to remove the Federal Reserve Chair Jerome powder Or other federal reserve officials, although they retrieve these final threats.
The report is coming between the president Donald Trumps Criticizes ongoing dust. The President repeatedly called on the Fed to reduce interest rates in the first period and in recent months. He threatened with firefighters several times, although he said he would not try to remove the Fed Department. There are questions about whether there is a legal authority.
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President Trump, Fed chairman Jerome Powell regularly criticized the first and second conditions of the White House. (Photo Credit: Getty Images / iStock / Getty Images)
Last month, the President wrote in the social media post, “Powell’s termination cannot be enough” and “always very late and wrong”. He also called on Powell to move forward with “soft cuts” to the contributions of interest and steep Sell the market Under the conditions of extensive uncertainty over trade policy.
Then he approached the threat of saying that Journalists are “without the intention of firing it.” After the decision of the Fed Keep prices stable In May, Trump wrote in a social media post, Powell, Powell, Powell, Powell. In addition, I love it! “
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The federal reserve has been instructed to balance the binary mandate of maximum employment and stable prices. (Photographer: Nathan Howard / Bloomberg / Getty Images)
In the report, it was explained in accordance with the current law Federal reserve The department can only be removed and Powell informs the president in press conferences when the president was asked about his work security. The precedent also protects governors of regional federal reserve banks.
However, he noted that there are uncertainty about how much the courts expect the other Independent Federal Agencies The central bank may affect the federal reserve, which has a potential impact on the independence.
“Institutional changes that increase the independence of the Central Bank – the appointment and elimination of officials – reduced the inflation by ½-1 (percentage) in the following years Inflation cost If such protectors become reverse (even if they did not act), “economists wrote.
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President Donald Trump has nominated Jerome Powell to serve as the Department of Federal Reserve in 2017. (Goal Loeb / AFP via Getty Images / Getty Images)
The report noted that the unplanned leadership change in global central banks was related to the increase in inflation by increasing a 1 percent point of inflation after the Ouster of the leader.
“These results are in recent weeks of President Trump, the statements of the prospects for the prospects of Chair Powell have strengthened, and capital assessments have been retracted, but the President Trump has lifted the prospect of eliminating Chair Powell on April 22, after retreating the comments on April 22.”
This Golden man sachs The analysis explained that most of the institutional changes in the investigated economies were “greater independence, amendments to independence were mainly among the developing countries.”
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“Therefore, our evidence is indirect and extrapolating our quantitative estimates to assess the risks of US monetary policy should be made important. Especially expect a larger macroeconomic and smaller effect in the United States and Financial market stability“They continued.
“Nevertheless, the existing arguments of global central banks show that a less independent diet will probably result in lower prices, low prices and a weak currency,” Goldman Sachs economists “.
