The power struggle in the USA is now also clouding the traditionally amicable relationship between the Treasury and the central bank. Treasury Secretary Steven Mnuchin announced last week that he will not renew five emergency loan programs on December 31st. The Federal Reserve was apparently taken by surprise. Richard Evans, president of Chicago’s district central bank, immediately criticized the decision: Given the spread of the virus and the risks it poses to the economy, more financial support is needed, not less.
Fed chairman Jerome Powell also shows little understanding for the government’s action. Mnuchin counters that the five programs have largely remained unused. The money made available is better used elsewhere.
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