Yellen to warn that eroding US democracy, Fed, threatens economic growth

10:21 am Wednesday, May 01st, 2024

By David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen will make the argument on Friday that strong democratic institutions — including an independent Federal Reserve — are a key foundation for sustained and shared growth and prosperity, according to excerpts of remarks released by the Treasury.

Yellen, in an address to the McCain Institute’s Sedona Forum in Arizona, will say that rioters who stormed the U.S. Capitol building on Jan. 6, 2021 put democracy under threat, “spurred by a lie,” according to the excerpts released on Wednesday.

“Undercutting democracy undercuts a foundation of sustainable and inclusive growth,” Yellen will say in the remarks.

The speech, at a Republican-founded institution in the important election battleground state of Arizona, is expected to be among Yellen’s most political addresses as Treasury secretary.

It is significant in that she will stray from promoting President Joe Biden’s economic policies into a key argument that his campaign is making against Republican rival Donald Trump: that Trump put democracy at risk by egging on the Jan. 6 Capitol rioters at the end of his presidential term and is likely to further erode institutions if elected to a second term.

The Wall Street Journal reported last week that Trump allies are drafting proposals that would attempt to erode the Federal Reserve’s independence and give Trump more influence over the central bank if he wins in November.

Yellen will make a plug for maintaining Fed independence in her speech.

“As Chair of the Federal Reserve, I insisted on the Fed’s independence and transparency because I believe it matters for financial stability and economic growth,” Yellen will say, according to the excerpts.

“Recent research has been consistent with my belief: It has shown that greater central bank independence is associated with greater price stability, which contributes significantly to long-term growth.”

(Reporting by David Lawder; Editing by Chizu Nomiyama)