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Category: Business, Economics and Finance / Economic Trends / Money and Monetary Policy / Government and Politics

Donald Trump and Janet Yellen head-to-head

Friday, 18 Nov 2016 08:00:34 | Thuy Ong

President-elect Donald Trump has called Dr Yellen "highly political" in the past. (AP: Alex Brandon)

Federal Reserve chair Janet Yellen has hit back at President-elect Donald Trump, indicating she will serve out her full term until 2018, in a rebuke to Mr Trump's comments on the campaign trail he would be inclined to replace her.

Mr Trump has been scathing of Dr Yellen and the Federal Reserve, calling her "highly political" while also questioning the Fed's independence.

This prompted speculation he might try to pressure her into stepping down early. His advisers said it was not his intention but suggested Mr Trump would not reappoint her, according to Bloomberg.

"I was confirmed by the Senate to a four-year term, which ends at the end of January 2018, and it is fully my intention to serve out that term," Dr Yellen told Congress' Joint Economic Committee overnight.

Mr Trump had previously commented he would back efforts to diminish the Federal Reserve's power and allow congressional audits.

"She is not a Republican. When her time is up, I would most likely replace her because of the fact that I think it would be appropriate," he told CNBC in May.

In apparent criss-crossing in his views of interest rates, he has indicated low interest rates are a "tremendous problem for the country" but said he was "for low interest rates, and I think we keep them low, and we have to compete".

"She is not raising rates for a very specific reason, because [President Barack] Obama told her not to, because he wants to be playing golf in a year from now ... and he doesn't want to see a big bubble burst during his administration," he said last November.

Rate rise 'relatively soon'

Dr Yellen in her testimony said the central bank would adjust its outlook as required, indicating that a rate increase could well become "appropriate relatively soon".

"The evidence we've seen since we met in November is consistent with our expectation of strengthening growth and an improving labour market," she said.

"I do think the economy is making very good progress toward our goals."

Mr Trump's new administration is setting out plans for potentially hundreds of trillions of dollars in tax cuts and infrastructure spending.

Dr Yellen started her tenure in February 2014 under the Obama administration for a four-year term. She is the first woman to head the Federal Reserve.

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