Hundreds of economists sign open letter defending Fed governor, central bank’s independence against Trump's move

By Mucahithan Avcioglu

ISTANBUL (AA) – A total of 593 economists signed an open letter addressed Tuesday to US President Donald Trump, warning that the firing of Fed Governor Lisa Cook threatens the independence of the central bank and damages confidence in it as one of the main pillars of the American financial system.

“Good economic policy requires credible monetary institutions. Credible monetary institutions, in turn, require the independence of the Federal Reserve,” said the letter, addressed to Trump, Congress and the public.

“This approach threatens the fundamental principle of central bank independence and undermines trust in one of America’s most important institutions. That trust is a cornerstone of the system that has fueled America’s economic vitality over the decades,” it said.

“We stand with Governor Cook and with the institutional safeguards that have long underpinned American economic strength,” it added.

Nobel laureates Joseph Stiglitz, Claudia Goldin, Alvin Roth, Paul Migrom and Paul Romer are among the signatories, along with several former Federal Reserve economists.

The letter was also signed by Jared Bernstein and Christina Romer, who served as the heads of the US Council of Economic Advisers under former presidents Joe Biden and Barack Obama.

The appeal was released a little more than a week after Trump attempted to fire Cook, a member of the Fed's Board of Governors, making him the first American president to do so.

Trump made public a letter to Cook on Aug. 25, stating that she had been fired after an administration official accused her of "mortgage fraud."

The president claimed that such accusations, along with a swift criminal investigation from the Justice Department, were "cause" for Cook's dismissal.

Economists have since resisted, pointing out that the Federal Reserve Act, approved by Congress in 1913, established the Fed's independence and "insulated it from day-to-day politics."

Trump has repeatedly demanded that the Fed cut interest rates, citing moves by European central banks and warned that delays could stall the US economy. But despite the political pressure, the Fed has kept rates constant for the last five meetings, making for sour relations between the administration and the central bank.

The US president has even considered firing Fed Chair Jerome Powell, but has recently turned his attention to sacking Cook, who said she would not step down.

After Trump attempted to remove the Fed governor, Cook filed a lawsuit against Trump.

Cook asked for a quick ruling to prevent Trump from dismissing her while the lawsuit is pending. The court, which held a hearing on the case Friday, has yet to issue a ruling.