The ongoing clash between the White House and the US Federal Reserve poses a significant threat to the global economy, experts warn. President Trump’s relentless attacks on the central bank’s policies have created a dangerous climate of uncertainty, with potentially far-reaching consequences.
The conflict began in earnest last year when Trump repeatedly criticised the Fed’s interest rate hikes, accusing the institution of undermining his administration’s economic agenda. The President has gone so far as to describe the Fed as the “biggest threat” to the US economy, a sentiment he has reiterated on numerous occasions.
This unprecedented public criticism of the Fed’s independence has alarmed economists and policymakers around the world. The central bank’s role as a stabilising force in the financial system is widely recognised, and its ability to operate free from political interference is considered essential for maintaining economic confidence and growth.
“The President’s war on the Fed is extremely concerning,” said Dr. Sarah Bloom Raskin, a former member of the Federal Reserve’s Board of Governors. “It threatens to undermine the credibility of one of the most important institutions in the global economy.”
The stakes are high, as the Fed’s decisions on interest rates, asset purchases, and other monetary policy tools have a profound impact on consumer spending, business investment, and the overall health of the economy. Trump’s efforts to browbeat the central bank into lowering rates could disrupt this delicate balance, potentially leading to asset bubbles, inflation, or other destabilising outcomes.
Moreover, the conflict has broader geopolitical implications. The Fed’s independence has long been a cornerstone of American economic leadership, and any perceived erosion of that independence could damage the US’s standing in the global financial system.
“The world looks to the Fed as a beacon of stability and sound policymaking,” said Mark Carney, the Governor of the Bank of England. “If that reputation is called into question, it could have serious repercussions for the global economy.”
As the war of words between the White House and the Fed continues to escalate, economists and policymakers are urging both sides to step back and recognise the gravity of the situation. The stability of the global financial system, they argue, should not be held hostage to political posturing or short-term economic considerations.
“This is a critical moment for the US and the global economy,” said Dr. Raskin. “We need the Fed to remain independent and focused on its dual mandate of price stability and maximum employment. Anything less could have disastrous consequences.”
