economy
January 14, 2026
Trump's war on the Fed threatens global financial stability, European central bankers warn
European central bankers said an "obedient" Fed under White House control would be "extremely grave" for global financial stability.
TL;DR
- President Trump's attacks on the Federal Reserve carry "grave" ramifications for the global financial system.
- These actions are seen as an attempt to dismantle nearly 50 years of consensus on central bank independence.
- Fed Chair Jerome Powell revealed a criminal probe into the Fed's headquarters renovation, calling it a political attack.
- Global central bank heads have jointly defended Powell.
- A Federal Reserve subservient to the executive branch is seen as unconstitutional and damaging to stability.
- Undermining the Fed's credibility could lead to a structural rise in global inflation due to the U.S. economy's systemic importance.
- High levels of global debt and deficits make the financial system vulnerable to such destabilization.
- Risks to central bank independence from populist governments could spread beyond the U.S.
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