"US President Donald Trump's attempts to put pressure on the country's central bank, the Federal Reserve, pose a "very serious danger for the US economy and the world economy," the president of the European Central Bank (ECB), Christine Lagarde, said on Monday. President Trump has threatened to dismiss Fed Chairman Jerome Powell after repeatedly attacking him for not cutting short-term interest rates, and is also attempting to fire Fed Governor Lisa Cook."
"Nevertheless, she also assessed that it would ultimately be "very difficult" for Trump to take full control of Fed policy. The US Supreme Court, which is largely respected in the country and therefore I hope will be respected by [Trump] as well, has clearly indicated that a Fed governor can only be dismissed in the case of gross misconduct, Lagarde explained. And you'd have go quite far to be fired for gross misconduct, she added."
""If US monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, given the effects this would have around the world, be very worrying, because it is the largest economy in the world," Lagarde told French radio station Radio Classique."
Attempts to pressure the Federal Reserve pose a very serious danger to the US and world economies. The independence of US monetary policy is crucial; loss of independence and dependence on individual dictates could unbalance the American economy and, through global linkages, be very worrying given the United States' size. Legal and institutional safeguards make full political control of Fed policy unlikely, since a governor can only be dismissed for gross misconduct, a high bar. A recent US appeals court ruling that most of the tariffs were illegal adds another layer of uncertainty to the global economic outlook. Threats to dismiss key Fed officials increase these risks.
Read at www.dw.com
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