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Janet Yellen says Trump doesn't understand what the Federal Reserve does

Washington - Former Federal Reserve Chair Janet Yellen said she doubts that President Donald Trump has a good grasp of monetary policy and what the central bank does.

In an interview with radio program Marketplace aired on Monday, Yellen said, "I doubt that he would even be able to say that the Fed's goals are maximum employment and price stability."

Mr. Trump's comments demonstrate a "lack of understanding" about the Fed, she added.

In the interview released Monday, Yellen made her most pointed comments about Mr. Trump since he decided not to nominate her for a second term as Fed leader. She left the Fed a year ago and was succeeded as chairman by Jerome Powell.

Mr. Trump has "made comments about the Fed having an exchange rate objective in order to support his trade plans, or possibly targeting the U.S. balance of trade," Yellen told Marketplace. "And, you know, I think comments like that shows a lack of understanding of the impact of the Fed on the economy and appropriate policy goals."  

Asked whether she thought the president has a good grasp of economy, she said, "No, I do not."

Trump: Federal Reserve thinks "our economy's too good"

Yellen, now a distinguished fellow in residence at the Brookings Institution in Washington, also said President Trump's unusually open criticism of the Fed risks damaging the central bank's credibility. 

"President Trump's comments about Chair Powell and about the Fed do concern me, because if that becomes concerted, I think it does have the impact, especially if conditions in the U.S. for any reason were to deteriorate, it could undermine confidence in the Fed," she said. "And I think that that would be a bad thing."

Mr. Trump last year repeatedly attacked Fed officials for hiking interest rates, accusing them of damping economic growth and saying that he "maybe" regrets choosing Powell as Fed chief.  

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