Trump firing Cook could damage Fed independence: Rebecca Patterson
President Trump’s federal reserve governor Lisa Cook’s efforts to ignite the Central Bank for a long time, according to investor Rebecca Patterson, may endanger the independence of the central bank.
Former Bridgewater Associates Chief Investment Strategist, CNBC’nin “fast money” in the statement, “We should never ignore this. This is what is going on,” he said.
Patterson, a senior man in the Foreign Relations Council, has spent for more than twenty years to analyze how politics and politics have shaped global markets. He said that politicization of the FED could erode the legitimacy and may have long -term economic consequences.
Based on economic research in countries that lose institutional integrity, Patterson notes a familiar model note: weak stock market performances, higher inflation and long -term yields, depreciation currencies and direct investment of direct investment.
Patterson warns the unique role of the United States because the world’s largest economy does not immune it.
The authority warns that Cook will be the first movement to stack Trump’s Fed for lower rates with loyal policy makers who will push the Fed for lower rates.
Patterson thinks that markets can initially react positively to lower rates. However, he warns that long -term effects may damage.
“In the short term, investors can ensure that lower rates that support growth are good for earnings.” He continued: “In time, the higher inflation will damage the consumption that will be reflected in the expectations of earnings.”
If Trump earns more control on the Fed, yield curveIncrease, weaken inflation expectations dollar, and higher spark gold Prices.
The question in Patterson’s mind is not whether the consequences of politicization of the Fed – then.
“Our moment may not come so fast or easy,” he said during the interview. “But look at other countries that go down this road, [it] If we’re not careful, he says where we’re going. “
