No president tried to fire a Fed Governor in the 112 years of history of the institution until Trump published a letter on Monday night reporting that Cook had been fired
European Central Bank President Christine Lagarde warned on Monday that US President Donald Trump assumed control of the Federal Reserve (Fed) “would be a very serious danger to the US and World Economy.”
In an interview with Radio French Radio Classique, the official considered that such an Fed take “will be difficult,” as the US Supreme Court has decided that the dismissal of a Central Bank governor, attempted by Trump, can only be done for serious reasons.
Still, Lagarde signaled that if that happened, “it would be a very serious danger to the US economy and the world economy,” because US Fed’s monetary policy impacts price stability and employment, and “the effects that would have around the world would be very worrying.”
Trump announced last Monday the resignation of Governor Lisa Cook, who appealed from the decision to the courts, citing an investigation into possible mortgage fraud began by the US president’s own government.
The attempted resignation occurred at a time of tensions between Trump and the Fed, which the president has been pressuring weeks to reduce interest rates, although leaders have been reluctant to do so, especially due to the inflationary risk they see in the president’s tariff increases.
No president tried to dismiss a Fed governor in the 112 years of history of the institution until Trump published a letter on Monday night reporting that Cook had been fired.
Trump said the reason for the resignation was allegations that the official committed fraud in a personal real estate loan in 2021, before being appointed to the board.
The court has signaled that the president cannot dismiss Fed employees for political differences, can only do so “for just cause”, usually meaning misconduct or negligence in fulfilling the duty.
Asked if it believes that the United States remains a rule of law, Lagarde – which has vast professional experience in the country – replied that yes, as long as the Supreme Court is respected and its decisions are applied.
Lagarde added that if this court is subject to pressure, it would be “very concerned about the rule of law.”
