Trump threatens to fire Fed governor Cook

Trump escalates political pressure on the Fed by threatening to fire Lisa Cook if she does not resign, following Powell’s Jackson Hole remarks and ongoing questions about central bank independence.

Trump Threatens to Fire Fed Governor Cook After Powell Speech

Moments after Jerome Powell’s Jackson Hole speech, Donald Trump publicly threatened to fire Lisa Cook if she does not resign, amplifying a political clash around the Fed’s leadership. Cook, the first Black woman on the Fed board, has faced allegations from mortgage executive Bill Pulte, with the Department of Justice signaling an inquiry into the matter. The move adds a new layer of uncertainty to the central bank at a time when policy directions are under close scrutiny.
Powell indicated the Fed could move on rate decisions if warranted but stressed the central bank must balance inflation with a cooling labor market. Bankers and analysts note that rate cuts in a high inflation environment are uncommon, raising the stakes for the Fed as it weighs its policy path. The administration has signaled leadership changes may be possible, with a process underway to identify Powell’s successor, complicating the horizon for policy credibility and institutional independence.

The episode lays bare a core risk: the possibility that a political appetite to shape policy leaks into the Fed’s personnel decisions. If a sitting governor can be pressured to quit, the credibility of the central bank could fray just as it faces a difficult inflation backdrop. That credibility is the currency the Fed trades in; without it, policy signals may lose merchants’ trust and markets could overreact to statements and timing.
Looking ahead, the clash could intensify scrutiny of the nomination and confirmation process for future governors, potentially shifting the board’s balance toward officials seen as more amenable to presidential priorities. Defending independence will require clear boundaries between policy disagreement and personnel actions, and a steadfast commitment to data over drama.

Highlights

The coming days will test how well the Fed can stay insulated from political tempers.