Former Fed Vice Chair Lael Brainard tells House panel attacks on Fed independence could raise inflation and hurt workers

Lael Brainard, former vice chair of the Federal Reserve, told the House Financial Services Committee on a hearing date not specified that efforts by the White House to influence or replace Federal Reserve officials risk undermining the central bank’s independence and could lead to higher inflation, higher long-term interest rates and weaker employment outcomes.

Brainard told members the Federal Reserve’s independence matters because “when there's not an independent central bank, it leads to higher inflation,” and she cited historical episodes and recent policy actions as reasons for concern. She also said two court rulings so far have sided with Governor Lisa Cook, who has filed suit after being summarily removed, and warned the legal fight could continue to the Supreme Court.

Why it matters: Central-bank credibility affects mortgage rates, Treasury yields and the dollar’s global role. Brainard said sustained political pressure on the Fed could raise inflation expectations and thereby increase…