Fed General CounselScott Alvarez, in testimony prepared for a Friday hearing, said legislation in the U.S.House of Representativesgiving theGovernment Accountability Officegreater leeway to examine the central bank could have a detrimental effect.
“These concerns likely would increase inflation fears and market interest rates and, ultimately, damage economic stability and job creation,” Alvarez said in theprepared remarksfor theHouse Financial Services Committeehearing.
In addition to potentially undermining public and investor confidence in the Fed’s setting of monetary policy, Alvarez said the legislation could hurt the U.S. government’s relationships with other countries.
“Foreign central banks and governments likely would be less willing to engage in financial transactions with the Federal Reserve if these transactions were subject to policy review by the GAO,” he said.
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