FED INDEPENDENCE AT RISK
The dispute sets up another test of presidential power in Trump’s second term, with the 79-year-old Republican moving aggressively to assert executive authority.
Even though the Supreme Court recently expanded Trump’s ability to remove members of independent agencies, its ruling carved out an exception for the Federal Reserve. Under federal law, Fed governors can only be removed “for cause,” generally interpreted as misconduct or failure to perform their duties.
David Wessel, a senior fellow at the Brookings Institution, said Trump’s effort signalled that Fed independence “is being eroded.”
He warned that if politicians dictate central bank policy, “the inevitable consequence is higher inflation and financial instability.”
“The Fed’s credibility as an inflation-fighter will be questioned,” Wessel told AFP, adding that investors could begin demanding higher yields on US debt as a result.
The Fed has not commented on the dispute.
OVERTURN IN COURT LIKELY
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, described the firing attempt as “an authoritarian power grab that blatantly violates the Federal Reserve Act”. She said the move “must be overturned in court”.
Cook was appointed to the Fed board in 2022 and reappointed in 2023. She previously served on the Council of Economic Advisers under former president Barack Obama.
Since its last cut in December, the Fed has kept its benchmark rate in a range of 4.25 to 4.50 per cent. Powell has said further cuts could be considered as soon as September, depending on incoming inflation data.
Trump has pushed for more aggressive easing, arguing that tariffs have not driven up consumer prices as feared. After fresh inflation figures showed annual price growth steady at 2.7 per cent in July, he again demanded lower rates.
