Political moves to influence the US Federal Reserve, including efforts to remove Fed Chair Jerome Powell and Governor Lisa Cook, threaten domestic and global economic stability. Removal attempts include presidential criticism of interest-rate decisions, threats to fire officials, and a legal challenge over Cook's alleged attempted removal. Cook is appealing the removal and lawyers argue that a Fed governor cannot be fired without required notice or cause; firing her would allow a presidential replacement despite a term extending to 2038. Political interference undermines central bank credibility, complicates inflation control and has coincided with rising US borrowing costs. Institutional and judicial checks make seizing Fed rate-setting power difficult.
Trump has repeatedly criticised Powell for not cutting interest rates and has threatened to fire him. He is also attempting to remove Cook, who is appealing against the decision in a case that could reach the US supreme court. In court on Friday, lawyers for Cook argued she could not be fired without the notice or cause required to remove a Fed governor. She learned of her attempted removal via a post on social media, they said.
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, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world, she said, according to remarks reported by Reuters.
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