ECB Executive Board Member Lane Warns: Federal Reserve Independence Being Eroded, Market Trust May Be Affected

BlockBeats News, August 28: European Central Bank (ECB) Executive Board member and Bank of Finland Governor Rehn warned on Thursday in a speech that the independence of the Federal Reserve is facing a "major" challenge for the first time in decades, posing "significant" risks to the market and the economy. Rehn said: "Since the containment of double-digit inflation in the 1980s, the independence of the Federal Reserve has been considered an inviolable principle— but now this principle is being undermined. When the central bank is trusted, the public, businesses, and financial markets all believe it will uphold price stability. This trust anchors inflation expectations." Rehn stated that the credibility brought by independence has increased the effectiveness of monetary policy, meaning that the central bank does not need to make "drastic" responses to temporary economic turbulence. (CNBC)