Ex-US Fed chief Yellen says Trump bid to oust governor Lisa Cook ‘dangerous’

WASHINGTON - US President Donald Trump’s move to oust Federal Reserve governor Lisa Cook marks a direct attempt to politicise the central bank and is “profoundly dangerous”, former Fed chief Janet Yellen warned on Aug 27.

Her opinion piece in the Financial Times came days after

Mr Trump said he was removing Dr Cook

from her position over allegations of mortgage fraud.

But Dr Yellen argued that accusations alone do not c onstitute the kinds of “cause” that allow for the firing of a Fed official.

“For Trump to invoke cause here is a fiction; it is a pretext to justify an autocratic power grab,” charged Dr Yellen, who also served as Treasury secretary under former president Joe Biden.

“It represents a direct attempt to politicise the Fed, intimidate its leadership and bend monetary policy to the president’s will,” she said.

Mr Trump is sending a “chilling message” to other officials sitting on the bank’s rate-setting Federal Open Market Committee that they could be targeted next if they disagreed with the president’s views, she said.

Among Dr Cook’s alleged false statements were claims of two primary residences, one in Michigan and another in Georgia.

But the Fed governor has not been charged with a crime and the alleged incidents occurred before she was in her current position.

Dr Cook, the first black woman to serve on the powerful Fed Board of Governors, has rejected Mr Trump’s unprecedented bid to remove her, saying he had no legal authority to do so.

Mr Trump’s targeting of Dr Cook marked a dramatic escalation of his efforts to influence the central bank, after he

repeatedly lashed out at Fed chairman Jerome Powell

for not slashing interest rates sooner.

On Aug 27, Dr Yellen warned that the Fed’s interest rate decisions would lose credibility if markets believed the central bank was guided by political orders.

“Inflation expectations could become unmoored. The dollar’s standing as the world’s reserve currency would be imperilled,” she said.

“This strategy will not even succeed in lowering long-term interest rates,” she said.

“Quite the contrary; long-term interest rates will probably rise due to higher inflation expectations.” AFP