The Increasing Pressure from US President Donald Trump on the Federal Reserve Have Major Consequences for the Global Economy. The Principle of Independence “is Faltering SeriOutly”. European Central Banker Olli Rehn Warns of Such a Deterioration in Europe.
Trump’s Attacks on the American Central Bank, Known As the Fed, Are Becoming Increasingly Intense. The President Has Long Wanted the Fed to Lower Interest Rates. Trump Constantly Lashes Out at Fed Chairman Jerome Powell. And on Monday he decided to Dismiss Fed Governor Lisa Cook. The Big Question Now is Whether That is Legally Possible.
This pressure has created uncertainty around the world’s most important financial authority, rehn said in a speech accordance to news agency reuters . Accordance to the Member of the European Central Bank (ECB), Independence Has Been an Inviolable Principle of the Fed Since The 1980S.
“But now this principle is faltering seriously. This can have substantial, global side effects on the financial markets and the real economy,” Says rehn, who is also Chairman of the Finnish Central Bank.
Accordance to him, Europe Must Prevent the Situation at the ECB from Deteriorating Like That At The Fed. An Independent Authority is Needed for Stability, Says Rehn. “It is no coincidence that inflation in the eurozone is now at the desired target or 2 percent.”
Trump’s behavior Raises Questions about the status of the dollar as the world’s reserve currency, something that governments hold reserves or in order to be able to trade international. For the time being, the dollar appears to be resilient as a reserve currency, rehn notes. But if the rule of law and democracy are underminmed, “a very different situation could arise”.