Donald Trump has moved to dismiss Federal Reserve Governor Lisa Cook on alleged mortgage fraud, a charge she contends lacks legal basis. The dismissal intensifies pressure on Fed chairman Jerome Powell and raises the prospect of court battles. The move represents a concerted effort to influence the timing of interest-rate cuts and to control monetary-policy decisions. Central bank independence has evolved through legal protections and practice to safeguard price stability and effective inflation control. Economists and bankers warn that political interference undermines investor confidence and can harm the broader economy and citizens' finances.
Donald Trump is overcome by his anxiety to seize control of the Federal Reserve, the most powerful central bank in the world, the one that sets the price of money in the United States and thereby sets the benchmark for the cost of a mortgage or paying interest on public debt. As he announced on his social media platform, the U.S. president has moved to fire Governor Lisa Cook on charges of mortgage fraud, a dismissal she claims has no legal basis.
And this unprecedented pressure from the White House torpedoes what in recent decades seemed a principle set in stone for central banks in developed economies: their independence from political power. Economists and bankers warn about the risks of questioning that independence, of the damage it poses to investor confidence in a country's economy, and the harm it can ultimately cause to citizens' wallets.
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