In election season, the Fed will "be accused of being political no matter what they do," Collins says

September 4, 2012

Susan Collins, the Joan and Sanford Weill Dean of Public Policy, was quoted by Reuters and CNNMoney regarding the dangers of politicizing the Federal Reserve and U.S. monetary policy.

Collins, who on Friday chaired the opening day of the Federal Reserve's annual conference in Jackson Hole, Wyoming, said any actions taken by the Fed this close to the presidential election would be viewed as political maneuvering.

"They could be political by holding back, or if they do more, they will be accused of being political too," Collins told "They'll be accused of being political no matter what they do, and I think that's just the territory before a major election."

Political rhetoric aimed at the Fed during this election cycle had some economists at the symposium, including Collins, worried about the Fed's long-term independence, according to Reuters.

"Compromising that (independence), maybe not immediately but over the medium- to longer-term, would have some really unfortunate consequences," that could raise borrowing costs and erode market confidence, Collins warned Reuters. "I absolutely hope that some wiser council would prevail should that issue come to the fore."

Collins made similar comments in a video interview with Reuters following the symposium, "Inching Toward a New Fed."