WASHINGTON, Feb 25 (Reuters) - Outgoing Atlanta Federal Reserve President Raphael Bostic said on Wednesday that the political battles around the Fed are undermining public confidence in the central bank's independence, a "major concern" that cuts to the heart of U.S. economic performance and the country's standing in the global economy.
Due to finish his term on Friday, Bostic used an essay on the eve of his departure, cast largely as a farewell letter, to warn that U.S. economic strength and standing as a global safe haven "is not guaranteed. Safeguarding our special status includes protecting the Fed's independence."
"My travels over the past several months have made clear that the legal and rhetorical battles raging around the central bank right now have caused people across a wide cross-section of our population to begin to doubt the Fed’s independence," Bostic wrote.
"It’s important that the public understand what is at stake. Decades of lived experience, as well as a large body of academic research, makes clear that a nation’s economic outcomes are better when there is an independent central bank. Inflation is lower, economic performance is more robust, and consumers and businesses alike are more confident that long-run investments will be worth making." Though his letter did not mention President Donald Trump or the Trump administration by name, the "legal and rhetorical battles" have included efforts by the president to fire Fed Governor Lisa Cook, a still-ongoing investigation of Fed Chair Jerome Powell by the Department of Justice, and frequent public demands by Trump for lower interest rates.
Powell earlier this year called out the DOJ investigation as an effort to pressure him on monetary policy, an unusual rebuke of the president by a Fed chair.
Other Fed officials and global central bankers have rallied behind Powell, citing as did Bostic the risks the U.S. would be taking if the Fed's standing was compromised.
Reporting by Howard Schneider; Editing by Andrea Ricci
