MNI BRIEF: Buba Chief Defends Powell Against 'Verbal Attacks'

Bundesbank president Joachim Nagel said the Federal Reserve’s leadership is being “discredited and defamed, and the independence of the institution is being bluntly questioned,” in a speech at Harvard University on Wednesday.

A politicised Fed would jeopardise U.S. economic and financial stability and prosperity, and tempt politicians in other countries to put pressure on independent central banks to lower interest rates, he said.

Recent changes to Germany’s Basic Law have opened up new fiscal leeway that should be used in a “targeted, swift, and efficient manner” to invest in growth potential, Nagel said. But Bundesbank calculations indicate that the new borrowing options are unfortunately also being used “to a considerable extent to create other budgetary leeway.”