Tuesday, Federal Reserve Chairwoman Janet L. Yellen cautioned the Senate Banking Committee that including currency manipulation provisions in the Trans-Pacific Partnership (TPP) agreement could “hamper or even hobble monetary policy.” During the hearing, Yellen acknowledged that currency manipulation to gain a competitive advantage should be addressed, but she said trade agreements are not the appropriate place to address such issues.
Yellen’s views on currency manipulation policies in trade agreements are in sync with the president and House Ways and Means Chairman, Paul Ryan (R-WI), who have pushed back against efforts to include those provisions in the TPP. The Obama administration is not planning on including a currency manipulation chapter in the agreement.
Congressional Democrats have been the administration’s biggest challenge in approving the TPP. Opponents of the trade deal cite labor, environmental, and currency issues as their reason for blocking the agreement.
To overcome the stalled negotiations, the Obama administration is asking Congress for legislation to fast-track trade negotiating authority, known as Trade Promotion Authority (TPA). Congress may introduce a TPA bill within days, but any TPA measure would face strong opposition from congressional Democrats and some Republicans.
On Wednesday, Yellen appeared before the House Financial Services Committee. During a heated three-hour long hearing, Republican lawmakers criticized the Fed for not raising interest rates quickly enough and failing to ease some of the restrictions placed on the financial industry after the 2008 market crash.