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Mario Draghi has pushed back against the new US administration on issues ranging from financial regulation and protectionism to the valuation of the euro, underlying the scope for transatlantic discord as President Donald Trump’s team advances its America First agenda.
In a question-and-answer session with the European Parliament, the European Central Bank president registered his concern at the White House’s plans to roll back the US’s 2010 Dodd-Frank financial regulations and Mr Trump’s hostility to multilateral trade deals.
He also denied accusations by Peter Navarro, the US president’s top trade adviser, that the EU sought a weak euro.
“The last thing we need is a relaxation of regulation,” Mr Draghi told MEPs, adding that it was thanks to supervisors that financial risk had been reduced. “The idea of repeating the conditions of before the crisis is very worrisome.”
By the way did anyone happen to catch this letter sent to Janet Yellen by the vice chair of the House Financial Services Committee? If not I highly recommend reading it in its entirety. ( Link
Remember Yellen testifies before Congress next week. Expect some fireworks
To me it sounded like it could've been written directly by the Trump administration.
The Fed, of course, will maintain that it's a wholly independent institution simply following its charter and the acting only in the best interests of the U.S. financial system, and that financial stability and formally agreed upon international banking standards are critical to American business interests overseas and blah blah blah. I mean, they'll of course say all the right and proper things in their well scripted and carefully worded response.
And they'll continue to face greater scrutiny by an increasingly skeptical executive branch and its surrogates in the Congress, but when all is said and done, I doubt there will be much, if any direct impact on monetary policy. It's not like Congress is gonna rewrite the Fed's charter. Besides, Trump won't want to antagonize the money printers too much, given the financing requirements of his aggressive fiscal ambitions.
