Yellen strongly criticizes proposed "Audit the Fed" bill

U.S. Federal Reserve Chair Janet Yellen on Tuesday strongly criticized a proposed legislation known as "Audit the Fed" which is aimed to expand Congress' oversight of the central bank's monetary policy.

"I want to be completely clear that I strongly oppose Audit the Fed," Yellen said during a hearing on her semi-annual monetary policy report before the Senate Banking Committee. "Audit the Fed is a bill that would politicize monetary policy, would bring short- term political pressures to bear on the Fed."

Yellen stressed the importance of the central bank's independence, noting that academic studies "established beyond the shadow of a doubt that independent central banks perform better."

"I would remind you that in the early 1970s, when inflation built and became an endemic problem in the U.S. economy, history suggests that there was a political pressure on the Fed that interfered with its decision-making," said Yellen, adding the Fed is already "extensively audited" in terms of its financial statements.

Last month, Republican Senator Rand Paul, a potential 2016 presidential candidate, reintroduced his "Audit the Fed" legislation with 30 co-sponsors that would subject the Fed's conduct of monetary policy to regular audits by Congress.

Yellen's strong objection suggests Fed officials see an increasing threat from Republicans to move the bill through Congress, as they now control both the Senate and the House of Representatives. Endite