The world’s most powerful central banker has warned against watering down regulations put in place following the financial crisis.
Janet Yellen, chair of the US Federal Reserve, said rule changes had made the system “undoubtedly safer”.
She insisted there was no evidence that regulatory changes had either acted as a drag on economic growth or hindered the ability of banks to lend.
Her comments will be seen as a warning to the White House not to water down regulations put in place after the crisis.
Many Republican politicians have been urging a loosening in regulations, in particular the Dodd-Frank Act, which became law in 2010 and which aimed to protect consumers by ensuring no bank could be “too big to fail”.
Speaking at the annual gathering of central bankers at Jackson Hole, Wyoming, Ms Yellen said the financial system was safer than it was when the global financial crisis erupted a decade ago.
She added: “A resilient financial system is critical to a dynamic global economy.
“Because of the reforms that strengthened our financial system, and with support from monetary and other policies, credit is available on good terms, and lending has advanced broadly in line with economic activity in recent years, contributing to today’s strong economy.”
Ms Yellen said that, now it was a decade since the start of the crisis, memories for some were starting to fade of just how costly the crisis had been and of why certain steps were taken in response.
She went on: “We can never be sure that new crises will not occur, but if we keep this lesson fresh in our memories – along with the painful cost that was exacted by the crisis – and act accordingly, we have reason to hope that the financial system and economy will experience fewer crises and recover from any future crisis more quickly, sparing households and businesses some of the pain they endured during the crisis that struck a decade ago.”
Ms Yellen’s comments will be seen as especially controversial because President Trump is currently deciding whether to re-appoint her when her present term of office ends in February next year.
Mr Trump, who has given little indication to date on whether he intends to re-appoint Ms Yellen, has previously said he wants to deregulate the finance sector and has expressed a desire to “do a big number” on Dodd-Frank.
In a speech last February, he said: “I have so many people, friends of mine, that had nice businesses. They can’t borrow money.
“They just can’t get any money because the banks just won’t let them borrow it because of the rules and regulations in Dodd-Frank.”
Ms Yellen’s speech will also come as a disappointment to market-watchers who had been hoping she might give a signal on when the Fed next plans to raise interest rates or on when it plans to start unwinding its $1tn worth of asset purchases – Quantitative Easing in the jargon – carried out since the crisis.
The lack of direction on monetary policy put pressure on the dollar, with the pound climbing nearly a cent against the greenback to $1.29.