New York Federal Reserve President John Williams has emphasised the importance of the Fed’s independence, amid United States President Donald Trump’s attempts to fire Fed Governor Lisa Cook.
While Williams did not comment directly on Cook’s attempted removal, he said she had “brought integrity and commitment to the central bank’s mission”. Trump said on Monday that he would remove Cook over allegations of mortgage fraud, though he likely does not have the power to do so, and she has refused to resign.
“We know from history that independent central banks can deliver low inflation, economic and financial stability,” Williams told CNBC.
“The structure of the Federal Reserve is such that it’s designed to have independent policymakers who are making decisions; longer decisions affect the economy over the longer term, away from short-term political pressure,” said Williams. “I think that’s really, really important.”
Williams also said that the Fed would likely cut rates once employment and price stability reached the central bank’s goals, but did not offer a time frame. The Federal Open Market Committee will next meet to consider a rate cut on 16 and 17 September.
Cook will file a lawsuit challenging Trump’s attempt to remove her, her attorney said, in a case that may end up at the Supreme Court. “As always, the Federal Reserve will abide by any court decision,” the Fed said.
Federal Reserve governors serve 14-year terms. According to the Federal Reserve Act, governors can only be removed by a president “for cause”, and no president has ever attempted to fire a Fed governor before.
While Trump has alleged that Cook may have committed mortgage fraud, she has not been charged with any crime.
Trump has repeatedly demanded that the Fed cut interest rates in recent months and has also called for Fed Chair Jerome Powell’s resignation.
Related content
