President Donald Trump’s attacks on the Federal Reserve have “grave” ramifications for the global financial system, a former European Central Bank governor has told CNBC.
Jean-Claude Trichet, who is also a former governor of the Bank of France, told CNBC’s “Squawk Box Europe” on Wednesday that the Trump administration is “trying to change the game” by upending the long-held consensus of central bank independence that has held in developed economies for almost 50 years.
On Sunday, Fed chair Jerome Powell revealed the Department of Justice had launched a criminal investigation into the $2.5 billion renovation of the central bank’s headquarters. Powell said the probe was a political attack in response to the Fed’s refusal to bow to pressure from Trump to lower interest rates further and faster.
On Tuesday, global central bank heads — including the Bank of England’s Andrew Bailey and European Central Bank President Christine Lagarde — issued a joint statement defending Powell.
Trichet compared Powell’s treatment to how monetary policy is made in certain emerging markets with weak institutions, warning that the “situation is extremely grave.”
