Trump's Federal Reserve Criticism: Global Repercussions Loom

ECB policymaker Olli Rehn highlighted concerns about President Donald Trump's criticism of the U.S. Federal Reserve. Trump's actions could undermine the Fed's independence and impact global financial markets. Rehn urged Europeans to strengthen confidence in the euro to avoid similar undermining of central banks in Europe.

President Donald Trump's escalating criticism of the U.S. Federal Reserve may lead to significant global repercussions, warned ECB policymaker Olli Rehn on Thursday. Speaking in a candid address, Rehn highlighted growing uncertainty surrounding the world's most influential monetary authority due to Trump's repeated attacks on Federal Reserve Chair Jerome Powell.

The independence of the Federal Reserve has been a cornerstone principle since the 1980s. However, this principle appears to be under threat, which could cause substantial ripple effects across financial markets and the global economy, Rehn stated. The recent dismissal of Fed Governor Lisa Cook by Trump has only intensified these concerns.

Rehn emphasized the need for Europe to act decisively in solidifying the euro's status as a stable currency. He connected the current 2% euro area inflation target directly to central bank autonomy. Meanwhile, economic resilience in the eurozone continues, although inflation may dip below the target due to external factors. Rehn assured that the ECB's Governing Council is vigilantly monitoring the situation.

(With inputs from agencies.)