Former President Donald Trump is still hitting the Fed where it hurts — the Fed’s aggressive monetary policy and its leadership. Just last week a court dismissed Trump’s attempt to fast-track Lisa Cook’s removal from her seat as one of the newish Fed governors. Trump started this action against Cook in August, claiming false mortgage fraud, which Cook has fiercely disputed. The court is scheduled to hear argument on Cook’s apparent dismissal in January.
Trump has not shied away from expressing his displeasure with the Federal Reserve’s ongoing interest rate hikes. He publicly attacked the central bank for failing to cut interest rates more aggressively. This happened literally immediately after the swearing-in of his second term. Trump argues that lower interest rates would alleviate inflation and reduce mortgage costs, which he believes are critical for economic stability. His comments have sometimes gone so far as to suggest that we fire Chairman Jerome Powell, making clear the depth of his frustration over the Fed’s conduct.
On September 17, the Federal Reserve made its first interest rate cut in almost a year. Powell maintains this was all due to concerns about the hot job market, not political pressure. Most Wall Street analysts are looking forward to additional rate cuts in the near future. This has led to unprecedented speculation about how the central bank will respond to future economic turmoil.
Cook, who is a member of the board that determines the Federal Reserve’s benchmark interest rate, contends that Trump’s motives for seeking her removal are politically charged. She thinks her views on monetary policy oppose Trump’s long-term plan for the Fed. Consequently, he is intent on sabotaging her authority. Trump has charged that Cook lied on a mortgage application she filed before she became governor. Cook emphatically refutes this charge.
Trump is still trying to push pressure on the central bank. At the same time, Powell made clear that the board is committed to making interest rate decisions going forward informed by data, economic fundamentals and economic indicators. This remark highlights the central bank’s independence from short-term political interference as it faces unpredictable economic headwinds.