The Stakes in the Battle for Fed Independence

The clash between Donald Trump and the Federal Reserve (Fed) is escalating, as the former US president announced the dismissal of Lisa Cook, a member of the Board of Governors. This move is considered a blow to the independence of the central bank.

Trump has been pressuring Fed Chairman Jerome Powell for months to cut interest rates and has threatened to replace him and even pursue legal action.

The independence of the Fed, institutionally enshrined in 1951, is considered a cornerstone of economic policy. The central bank regulates interest rates without approval, avoiding political interference.

Research indicates that independent central banks maintain lower inflation. Critics accuse central banks of delayed responses and for widening inequalities through quantitative easing (QE) programs.

With economic growth slowing, pressure is mounting for a change of course, highlighting the stakes: maintaining independence or subjecting the Fed to political control.

Source: Capital.gr