UBS Chief Economist: Fed's Stance May Lean Hawkish, Concerns Over Its Independence

Odaily News UBS Chief Economist Paul Donovan wrote in an article that initiating a criminal investigation against the incumbent Federal Reserve Chairman could ultimately help strengthen the central bank's independence. Market reactions indicate that investors' concerns about the Fed's ability to manage interest rates without political interference are rising. Although overall asset price volatility is limited, long-term U.S. Treasury yields have risen, and the dollar has weakened. Donovan stated that Powell's tough stance may imply his reluctance to resign from his position as a Federal Reserve Governor this year; simultaneously, there are signs that the U.S. Senate might delay confirming the nomination of a new Fed Chair. He also noted that market concerns over central bank independence could translate into a more hawkish force in future monetary policy decisions. (Jin10)