JPMorgan Chase (JPM) CEO Jamie Dimon offered support for Federal Reserve Chair Jerome Powell on Tuesday, reiterating the importance of an independent US central bank after the Fed chair disclosed late Sunday that the Department of Justice had opened a criminal investigation into Powell’s testimony to Congress last year.
“While I don’t agree with everything that the Fed has done, I do have enormous respect for Jay Powell the man,” Dimon said during a call with reporters following the bank’s fourth quarter earnings report.
“Everyone we know believes in Fed independence … anything that chips away at that is probably not a good idea,” Dimon added. “In my view, it will have the reverse consequences. It will probably raise inflation expectations.”
Dimon, along with many other Wall Street CEOs, came to Fed’s defense last summer when reports first surfaced that the Trump administration was seeking to oust Powell. At the time, Dimon told reporters that an independent Federal Reserve is “absolutely critical” for Powell and whoever succeeds him as chair.
Read more: How much control does the president have over the Fed and interest rates?
Dimon joins a growing chorus of luminaries backing Powell, with three former Fed chairs and four past Treasury secretaries issuing a forceful statement on Monday offering their support.
“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine [the Fed’s] independence,” the statement said, which was signed by former Fed Chairs Janet Yellen, Ben Bernanke, and Alan Greenspan, as well as four past Treasury secretaries who served under Republican and Democratic presidents.
“This is how monetary policy is made in emerging markets with weak institutions,” the statement added. “It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
A wide swath of investors and economists believe that an independent central bank, free from political influence, plays a vital role in guarding against inflation, in turn keeping the US economy healthy.
Bank of New York Mellon (BK) CEO Robin Vince on Tuesday also commented on concerns about the Federal Reserve’s independence, echoing Dimon.
“If you look at the things that underpin the US bond market, that [Fed] independence is one of those things,” Vince said on a call with reporters.
“Sort of questioning one of the tenets that underlies the bond market runs the risk of actually doing the opposite of that — and actually pushing up interest rates,” Vince added.
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