Dimon Defends Federal Reserve Independence After Trump's Attacks

Many on Wall Street privately worry that political pressure will undermine Fed's credibility

- Sam Goldfarb & Nick Timiraos

JPMorgan Chase Chief Executive Jamie Dimon sounded Wall Street's clearest warning against the Trump administration's attacks on Federal Reserve Chair Jerome Powell, describing the central bank's independence as crucial. "I think the independence of the Fed is absolutely critical," Dimon told media members in a call after the bank's earnings announcement. "Playing around with the Fed can have adverse consequences, the absolute opposite of what you might be hoping for."

Dimon became the first leader of a major U.S. financial institution to publicly address the administration's broadsides against the central-bank chief. Many on Wall Street have privately worried that political pressure will undermine the Fed's credibility.

With Washington running larger budget deficits for a peacetime economy that isn't in a recession, this could be a more pressing worry in the years to come. A demonstrated tolerance for higher inflation by U.S. policymakers could drive up long-term government borrowing costs, creating new stresses for households, businesses, and banks.

President Trump has mocked and criticized Powell for months for being slow to cut interest rates. He has called for the Fed to cut its benchmark rate, currently around 4.3%, by up to 3 percentage points.

White House advisers have tried to gin up further pressure on Powell by arguing the central bank has spent too much money renovating its historic office building and an adjacent vacant building it acquired seven years ago.

Trump nonetheless told reporters Friday he wasn't planning to remove Powell, whom he named as Fed chair during his first term and whose term in that position expires next May.