If US President Donald Trump removed Federal Reserve Chairman Jerome Powell or Fed governor Lisa Cook, then this would represent a “very serious danger for the US economy and the world economy,” the European Central Bank President Christine Lagarde said on Monday.
Speaking to French broadcaster Radio Classique in an interview, Lagarde 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.”
Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting the short-term interest rate and threatened to fire him. Trump is also attempting to fire Federal Reserve Governor Lisa Cook.
A court hearing on Trump’s attempt to fire Cook ended on Friday with no immediate ruling on the unprecedented legal fight, meaning the US central bank policymaker will remain in place for now.
After hearing oral arguments for two hours in a court in Washington, D.C., US District Judge Jia Cobb asked Cook’s lawyers to file a brief on Tuesday laying out in more detail their arguments for why the ouster was unlawful.
The case, which will likely end up before the US Supreme Court, has ramifications for the Fed’s ability to set interest rate policy without regard to politicians’ wishes, widely seen as critical to any central bank’s ability to keep inflation under control.
The Fed has said it would abide by any court decision. It has given no indication that Cook’s status as a member of its Board of Governors has changed, and she remains listed on its website as an active member of several internal committees.
