Trump’s Push to Dismiss Fed Governor Cook Sparks Independence Fears
A former chairman of the Federal Reserve has warned that Donald Trump’s attempt to remove Federal Reserve Governor, Lisa Cook is a “dangerous precedent” that could undermine the central bank’s independence.
The warning came on Wednesday after Trump escalated efforts to oust Cook amid unverified allegations and policy disagreements.
The move has been widely condemned by economists, lawmakers, and civil rights groups, who argue it threatens the Fed’s neutrality.
Cook, appointed in 2022 and the first Black woman to serve on the Fed’s board of governors, has refused to step down, insisting that presidents lack the authority to dismiss governors, who serve fixed 14-year terms.
Legal experts predict the dispute could trigger a protracted court battle with sweeping implications for the relationship between the presidency and independent institutions.
The former Fed chief, speaking in Washington, described the development as “deeply concerning,” adding: “The credibility of the Federal Reserve rests on its independence. Politicising it in this way risks destabilising financial markets and undermining confidence at home and abroad.”
Markets showed signs of unease following Trump’s announcement. The dollar weakened against other major currencies, gold prices rose, and investors shifted into US Treasury bonds. Analysts said the uncertainty could complicate the Fed’s upcoming September policy meeting, especially as inflationary pressures remain high.
Critics of the move argue it is part of a wider effort by Trump to bring independent agencies under political control.
Democratic lawmakers and civil rights groups also condemned the targeting of Cook, framing it as an attack both on institutional integrity and on diversity.
Trump’s allies, however, defended the push, claiming the Federal Reserve needs “fresh leadership” aligned with his economic vision, which favours looser monetary policy to spur growth.
The outcome of the standoff could shape the future of the central bank.
Economists warn that if the Fed is seen as subject to political interference, borrowing costs could rise, investor confidence could falter, and the US’s global economic standing could be weakened.
