President Donald Trump's attempts to influence or remove Federal Reserve officials threaten the independence of the Fed and could jeopardize US price stability, employment, and global economic balance. European Central Bank president Christine Lagarde characterized such interference as a serious danger and noted legal obstacles could complicate efforts to take control. An effort to remove Fed governor Lisa Cook over mortgage-fraud allegations led to Cook denying wrongdoing and filing a lawsuit. Repeated public attacks on Fed Chair Jerome Powell and investor concern have raised fears that forced removals could unsettle the dollar and US Treasury markets.
"If it were no longer independent for this purpose, and instead depended on the dictates of one person or another, then I believe the balance of the US economy, and consequently the effects this has on the entire world - since it is the largest economy in the world - would be very troubling," Lagarde added.
"Although Trump said in April that he had no plans to fire Powell, investors have grown jittery at his efforts to undermine the Fed's independence. In July, analysts at Deutsche Bank said Trump removing Powell from his post is 'one of the largest under-priced event risks over the coming months.' They said such a move could shake the dollar and Treasury markets."
"Trump said he sought to remove Fed governor Lisa Cook last month, citing allegations of mortgage fraud. Cook has denied wrongdoing and has filed a lawsuit to challenge the president's move."
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