Trump storms the central bank

U.S. President Donald Trump has crossed a red line in his attack on the Federal Reserve with his bid to dismiss Governor Lisa Cook, who is under investigation for possible mortgage fraud, in an unprecedented challenge to the monetary authority’s 74 years of independence. For months, Trump has publicly pressured Fed Chairman Jerome H. Powell to lower interest rates and has threatened to remove him. Cook’s dismissal, which she will challenge in court, shows that Trump is determined to put the world’s leading central bank at his service, even at the cost of an independence that for decades has helped sustain confidence in U.S. economic policy and the dollar’s status as a reserve currency.

Decisions on money prices are made collectively by the Federal Open Market Committee, composed of the seven members of the Board of Governors, the president of the New York Federal Reserve Bank, and four other presidents who rotate among the other 11 regional Fed banks. Of the seven board members, Trump appointed two governors during his first presidency, in addition to Powell. These two voted in line with Trump at the last meeting. In early August, Governor Adriana Kugler unexpectedly resigned, and Trump is hoping the Senate will ratify his economic advisor Stephen Miran for that position. If he now succeeds in replacing Cook, whose term does not end until 2038, Trump could have control by a single vote over a key body of the Fed. This board is the one that must renew the 12 presidents of the Fed’s regional banks in February 2026. The ultimate goal is to subject U.S. monetary policy to Trump’s whims.

The attack on the Fed is a severe blow to the credibility of American economic institutions following the dismissal of the director of the Bureau of Labor Statistics for publishing disappointing employment figures. Above all, it underscores how economic populism is taking hold in the world’s largest economy.

American populism has always viewed the financial establishment with suspicion, and Trump has fully embraced that agenda. On the one hand, pressure to lower interest rates seeks to boost easy credit, a key factor for an economy hooked on debt. On the other hand, the Trump administration has focused on alternative assets such as cryptocurrencies to ensure credit and money flow outside the banking establishment and the Federal Reserve itself. Furthermore, defending a weak dollar is the flip side of tariffs in the “America First” policy, regardless of the consequences for the rest of the world. Only the markets can stop this attack, and unfortunately, their reaction seems more than restrained so far.

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