UBS Chief Economist: The Fed May Take a Hawkish Stance, Raising Concerns About Its Independence

According to Odaily, UBS Chief Economist Paul Donovan wrote that initiating a criminal investigation against the sitting Federal Reserve Chair could ultimately help strengthen the central bank's independence. Market reactions indicate that investors are increasingly concerned about the Fed's ability to manage interest rates without political interference. Although overall asset price volatility remains limited, long-term U.S. Treasury yields have risen and the dollar has weakened. Donovan stated that Powell's tough stance may suggest he is unwilling to resign from the Fed Board this year; at the same time, there are signs that the U.S. Senate may delay confirming the nomination of a new Fed Chair. He also pointed out that market concerns over central bank independence could translate into a more hawkish force in future monetary policy decisions. (Golden Ten Data)