When Trump moved to fire the Fed’s Governor Lisa Cook, who was independence with central bank in unprecedented conflict
The dollar weakens U.S. borrowing fees and escalates his fight with the country’s independent central bank after President Donald Trump claims to fire Fed Gov. Lisa Cook.
Trump’s move in modern American history without precedent, said Tuesday night that Cook “immediately effective” from her removal from the Fed’s seven-man dominance committee about mortgage fraud. Cook denied misconduct and said she would not resign, laying the foundation for the legal battle for whether the president has the right to fire the Fed governor.
The dispute is because Trump has intensified pressure on central banks to provide huge cuts in interest rates to support the economy and job markets.
Investors sold U.S. government bonds after Trump’s speech, Investors issued a 0.06 percentage point yield to 4.92% in the 30-year Treasury. The dollar fell 0.15% against a basket of major currencies, while the 0.13% currency fell to $1.35 against Sterling. Traditional haven gold climbed 0.4% to $3,388.60, the highest since August 11.
Wall Street stocks were back to higher from rough open-ended stocks, with both the S&P 500 and Nasdaq stocks up 0.4%. Analysts say the relatively small dollar reflects uncertainty about whether Trump will make a decision in court.
“So far, the relatively small dollar sell-off reflects uncertainty about whether President Trump’s decision to fire President Cook’s decision to fire the federal government. Although it does mark President Trump’s attack on the independence of the Fed, which could eventually trigger a larger short sale.”
Cook became the first African-American woman appointed to the Federal Reserve Committee in 2022, accused of improperly declaring her primary residence in Georgia and Michigan to ensure lower mortgage rates. “I will continue to perform my duties to help the U.S. economy since 2022,” she said Tuesday.
The FAA investigation into pilot operations has not worked here, but Fed insiders warn that Cook’s refusal to resign would complicate the central bank’s work. “If they allow her to continue as governor and the court finds that the president does have the right to fire her, then anything she starts as governor today is invalid,” said Jim Bianco of Bianco Research.
If Cook is forced to be eliminated, Trump will appoint his second governor within a month after nominating his economic adviser Stephen Miran to a vacant seat resigned by Adriana Kugler.
The turmoil in the Federal Reserve is a critical moment in U.S. monetary policy. Central banks have kept interest rates at 4.25-4.5% since December, but traders expect the first year of September to cut in response to the weak job market and inflation steady at 2.7%.
Fed Chairman Jerome Powell, also faces Trump’s attack, said last week that cuts could be on the table. There are currently two federal government interest rate setters, two Trump appointments, which have called for immediate relief. If Miran attends the September 18 meeting in time, he would become the third dissident on the committee, the biggest internal rift since 1988.
With Trump’s demands as low as 1%, the confrontation with Cook has increased concerns about the erosion of the Fed’s independence – a principle that has long been crucial to maintaining the credibility of U.S. economic policy.
