President Donald Trump is amplifying his efforts against Fed Chair Jerome Powell, aiming to reduce interest rates through threats and pressure on Federal Reserve members.
Trump Targets Rate Reductions
Recently, Trump indicated his intention to permit legal action against Powell and is now focusing on Fed member Lisa Cook. Following Chuck Kugler's early resignation, Trump appointed Miran to the Fed, gaining the support of three members in favor of rate cuts. Two additional members argue that if unusual inflation fluctuations do not occur, rates should be lowered due to employment declines.
Operation Against the Fed
The FHFA investigation concerning Cook has concluded, paving the way for a criminal inquiry by the Justice Department. Trump, known for his unconventional methods, pressures Fed members to begin rate cuts, suggesting severe consequences otherwise. Amid allegations of corruption against Powell and mortgage fraud investigations against Cook, the pressure mounts.
Impact on Fed's Independence
These operations, blatantly damaging Fed’s independence, proceed without regard for market concerns. The Fed Chair and members are coerced, through legal intimidation, into compliance with Trump’s demands due to fear of legal entanglement. Cook has consistently aligned with Powell in votes and statements, with years remaining in her term.
The situation surrounding pressure on the Fed and targeting interest rates intensifies debates over the independence of the Central Bank and how political influence can interfere with monetary policy.
