New York CNN Business —  

Stephen Moore wants the Federal Reserve to immediately slash interest rates – a startling step that would likely reinforce Wall Street’s fears that a recession is brewing.

Moore, the economist President Donald Trump has said he will nominate to the Fed, told The New York Times on Tuesday that the US central bank should reverse course and cut interest rates by half a percentage point right away.

Former Federal Reserve officials and economists told CNN Business that such a dramatic move would badly backfire by eroding confidence in the economy – and perhaps the central bank itself.

“It would scare the hell out of the markets,” Richard Fisher, former Dallas Federal Reserve president, said in an interview. “It would really put a dent in the perception of the independence of the Federal Reserve.”

Ed Yardeni, the former chief economist at Deutsche Bank, called Moore’s idea “radical” and risky because it would spook investors about what the Fed sees on the horizon.

“The first reaction would be, ‘Boy the economy must be in really horrible shape. There must be some financial crisis they’re trying to preempt,’” Yardeni said.

The Fed normally holds its fire on rate cuts until the economy is on the verge of or already in recession. Trump himself said last week on Twitter the “economy is great.”

Sarah Bloom Raskin, an Obama-appointee who served on the Federal Reserve Board from 2010 to 2014, predicted that “markets would tank” if the Fed took Moore’s advice and immediately cut rates even before waiting for the next meeting.

“That’s the definition of poor monetary policy communication,” Raskin told CNN Business.

’Trump was furious’

Moore did not respond to a request for comment. The White House declined to comment.

Moore, a former CNN analyst and Trump campaign adviser, told the Times on Tuesday that he was “really angry” about the Fed’s “inexplicable” decision to raise interest rates in December.

“I was furious – and Trump was furious, too,” Moore said. “Commodity prices were already falling dramatically.”

Moore isn’t alone. Wall Street tanked in part because of fears that the Fed was hastily raising borrowing costs to levels the US economy couldn’t handle. The S&P 500 suffered its worst December since the Great Depression.

The Fed has since done a 180, going from very aggressive to very cautious. Central bank officials have signaled they won’t raise interest rates until 2020, a sharp pivot from previous plans.

Rate cut odds on the rise

Moore told the Times he regretted saying in December that Federal Reserve chief Jerome Powell should resign. But he doubled down on his call for the Fed to reverse course and slash rates.

And to Moore’s point, an eventual rate cut is starting to get priced into the market. There is more than a 50-50 chance that the Fed will lower rates at its September meeting, according to the CME’s FedWatch tool.

However, there is only an 8% chance of a quarter-point rate cut at the May 1 meeting. And investors are pricing in no chance that the Fed will take Moore’s advice and slash rates by half a percentage point.

’Bomb thrower’

Last week, Trump announced on Twitter his intention to nominate the “very respected” Moore to join the Fed’s board of governors.

“I have known Steve for a long time – and have no doubt he will be an outstanding choice!” Trump tweeted.

Others, including conservatives, have expressed concern about the pick.

“Steve is a perfectly amiable guy, but he does not have the intellectual gravitas for this important job,” Greg Mankiw, an economics professor at Harvard and chairman of the White House Council of Economic Advisers under President George W. Bush, said in a blog post.

Moore’s call for an immediate rate cut could cast further doubt about his candidacy to join the Fed.

“I don’t think he has the economic or financial depth required of a Federal Reserve governor,” Fisher told CNN Business. “Mr. Moore just needs to A.) be quiet and B.) seek a job elsewhere.”

Yardeni cautioned Moore against “being a bomb thrower” before he’s even been nominated to the notoriously deliberative Fed.

The ironic part about Moore’s call for rate cuts is that it comes in the face of his strong support for Trump’s tax cuts – a policy he said would juice economic growth.

“You can’t have it both ways,” Yardeni said. “You can’t say the economy will get a big boost from tax cuts and you need lower interest rates to stimulate demand.”

But some members of Congress think Moore has the credentials.

“Stephen’s a guy with great integrity and great intellectual capacity. … I don’t think he’d be politically swayed,” Republican Senator Kevin Cramer told Politico.

The Fed’s independence is crucial

Of course, if Moore does make it to the Federal Reserve, he would be just one of many voices. Out of the five current Fed governors, three were Trump appointees. His views would easily be outnumbered by Trump’s other picks, many of whom have been applauded as strong selections.

“By and large, the nominations have been quite good,” said Vincent Reinhart, chief economist at Mellon, an asset manager owned by BNY Mellon.

Reinhart, a former Federal Reserve official, said he won’t be “panicked by diversity” being added to the Federal Reserve Board, referring to Moore’s distinct views.

Reinhart cited Trump’s elevation of Powell to the role of chairman as a positive.

However, Trump himself slammed Powell last year. Rumors that Trump would do the unthinkable – fire Powell – contributed to the plunge in stock prices in December.

Bigger picture, there is a risk that Trump’s appointment of Moore and repeated attacks on the Fed diminish the belief that the central bank is a truly independent entity that can manage the economy without political influence.

And that’s no small risk. The perception of Fed independence goes to the heart of investor confidence in the financial system.

Rate cuts aimed at meeting political needs could spark runaway inflation. Wall Street knows that allowing politicians to call the shots at the Fed is a recipe for disaster.