Former Federal Reserve chair Janet Yellen has condemned US President Donald Trump’s move to remove Federal Reserve Governor Lisa Cook, describing it as a “profoundly dangerous” attempt to politicise the central bank.
In an opinion piece published in the Financial Times on Wednesday, Yellen criticised Trump’s justification for Cook’s dismissal, which cited allegations of mortgage fraud. She argued that such claims did not amount to “cause” sufficient to remove a Fed official.
“For Trump to invoke cause here is a fiction; it is a pretext to justify an autocratic power grab,” Yellen wrote. “It represents a direct attempt to politicise the Fed, intimidate its leadership and bend monetary policy to the president’s will.”
She warned that Trump’s action sent a “chilling message” to other members of the Federal Open Market Committee that they could be targeted if they defied the president’s views.
Cook, the first Black woman to sit on the Fed’s Board of Governors, has rejected Trump’s unprecedented order, insisting that he has no legal authority to remove her. She has not been charged with any crime, and the alleged incidents predate her current role.
Trump’s attempt to oust Cook marks a sharp escalation in his clashes with the central bank. He has frequently criticised Fed Chair Jerome Powell for failing to cut interest rates quickly enough.
Yellen cautioned that undermining the Fed’s independence could destabilise global confidence in US monetary policy. “Inflation expectations could become unmoored. The dollar’s standing as the world’s reserve currency would be imperilled,” she said.
She added that Trump’s strategy would backfire: “This will not succeed in lowering long-term interest rates. Quite the contrary, rates will probably rise due to higher inflation expectations.”