The Federal Reserve warned yesterday that a congressional threat to curtail its independence would raise the cost of servicing US debt and hurt taxpayers for "generations".

Ron Paul, a Republican representative from Texas, has gathered the support of 250 co-sponsors in the House - a majority - including some Democrats, for a bill that would audit the Fed's monetary policy decisions. He told a congressional hearing he wanted the power to prevent the Fed being "secret and clandestine and serving special interests".