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Fed Chair Powell highlights importance of independent Fed

Last Updated May 25, 2018 at 11:40 am EDT

FILE- In this April 6, 2018, file photo, Federal Reserve Chairman Jerome Powell listens as he tours mHUB during a visit to Chicago. Powell said the Fed's independence from political pressure plays a key role in enabling the central bank to fight inflation, stabilize the economy, and regulate the financial system. His remarks Friday, May 25 come after Kevin Warsh, a former Fed official who President Donald Trump interviewed for the chairman post, said in an interview with Politico that Trump did not appear to view the Fed as an independent body. (AP Photo/Charles Rex Arbogast, File)

WASHINGTON – Federal Reserve Chairman Jerome Powell says the Fed’s independence from political pressure plays a key role in enabling the central bank to fight inflation, stabilize the economy, and regulate the financial system.

His remarks Friday come after Kevin Warsh, a former Fed official who President Donald Trump interviewed for the chairman post, said in an interview with Politico that Trump did not appear to view the Fed as an independent body. He said Trump was direct about how he thought interest rates should be managed.

Powell warned against taking that independence for granted given its recent success in keeping inflation low.

Powell warned, “We must not forget the lessons of the past, when a lack of central bank independence led to episodes of runaway inflation and subsequent economic contractions.”