By Chris Dorrell The independence of the US Federal Reserve may come under threat from ballooning government deficits, according to a leading analyst. Liberum’s Joachim Klement argued the Federal Reserve may have to increasingly consider the impact of interest rate hikes on government debt, raising the risk that its independence could be undermined by fiscal dominance. Fiscal dominance is when the decisions of an independent central bank are driven by how they might impact fiscal policy rather than narrowly monetary issues. For example, big budget deficits could prevent aggressive rate hikes i…
