President Donald Trump’s effort to sack Federal Reserve Governor Lisa Cook is about more than firing someone: It’s a maneuver that, if successful, would mark a seismic shift for an institution that for ages had been considered above politics.
Since taking office in January, Trump has placed the Fed directly in the crosshairs of executive power. He has berated central bankers for not lowering rates, threatened to remove Chair Jerome Powell, and now has taken the unprecedented step of actually attempting to unseat Cook.
From the president’s perspective, he’s looking to reform what has been an unpopular institution, often blamed for the runaway inflation that hit the U.S. following the Covid pandemic. Trump sees lower interest rates as a pathway to manage the swelling federal debt while boosting a housing market that has been a counterweight to an otherwise growing economy.
However, legal scholars as well as financial market experts and present and former Fed officials say Trump’s moves not only threaten to make the Fed more political but also would undermine key pillars of the American financial system.
“We are on a road that is going to lead to the erosion of central bank independence,” said Kathryn Judge, a professor at Columbia Law School. “It would be incredibly costly for the long-term health of the economy for the Fed to lose the credibility that it has spent decades trying to build.”
