The fate of Lisa Cook, who is fighting attempts by President Donald Trump to remove her from the Federal Reserve’s Board of Governors, has huge implications for a keystone of good economic policy: central bank independence.
At the heart of her firing attempt – and other moves to undermine the Fed by the Trump administration – is a power struggle. Central banks, which are public institutions that manage a country’s currency and its monetary policy, have an extraordinary amount of power. By controlling the flow of money and credit in a country, they can affect economic growth, inflation, employment and financial stability.
These are powers that many politicians would like to control or at least manipulate. That’s because monetary policy can provide governments with economic boosts at key times, such as around elections or during periods of falling popularity.
