Fed Chair Janet Yellen to Face Congress on State of the Economy

A string of upbeat US data and increasingly positive comments from Fed boss Janet Yellen have fuelled speculation of an interest rate rise in the world's top economy

Federal Reserve Chairwoman Janet Yellen will answer questions from a Republican Congress, wary of easy monetary policy and the Fed’s cozy relationship with the Obama administration.

The Fed chairwoman will testify before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. Chairwoman Yellen will report on the state of the economy and her cautious approach to raising interest rates. The Federal Reserve plans to raise interest three times in 2017.

President Trump criticized Yellen for keeping interest rates low to help Secretary Clinton get elected. “This Janet Yellen of the Fed. The Fed is doing political things,” said Trump, adding the Fed is letting politics influence its interest rate policy. “Believe me, the day Obama goes off and he leaves and he goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you will see some very bad things happen. Because the Fed is not doing their job. The Fed is being more political than Secretary Clinton.”

Congressional Republicans have criticized the Federal Reserve for favoring Democrats in the past.

Former Sen. David Vitter (R-LA) chastised Federal Reserve Governor Lael Brainard’s previous donations to the Hillary Clinton campaign. Sen. Vitter said, “If anyone had questions about the independence of the Federal Reserve, this makes it crystal clear they’re not. This is just more evidence proving that the greatest threat to the Fed’s supposed monetary policy independence is its cozy ties to the executive branch.”

The president also believes that the Fed’s easy monetary policy created an economic bubble.

President Trump said during a presidential debate, “Believe me, we’re in a bubble right now, and the only thing that looks good is the stock market,” He continued, “But if you raise interest rates, even a little bit, that’s going to come crashing down. We are in a big, fat, ugly bubble and we better be awfully careful and we have a Fed that’s doing political things.”

Janet Yellen’s first hearing will be held tomorrow, at 10:00 am at the Senate Banking Committee. Watch here.