Loss of Fed independence would push up borrowing costs, set off turmoil, ECB’s Schnabel says

By Balazs Koranyi and Francesco Canepa

FRANKFURT (Reuters) -Curtailing the U.S. Federal Reserve’s independence could backfire and push up borrowing costs rather than lower them while disrupting the entire global financial system, European Central Bank board member Isabel Schnabel said.

U.S. President Donald Trump has been exerting relentless pressure on the Fed to cut interest rates and publicly discussed firing Fed Chair Jerome Powell, whom he called a ‘numbskull’ and a ‘moron’, for not giving in to his demands.

Upping this battle, Trump last month attempted to fire Fed Governor Lisa Cook, setting off a critical legal test over the Fed’s ability to function without political interference, the cornerstone of modern central banking.

“Any attempt to undermine central bank independence is