Donald Trump, a president with a unique approach, continues to execute actions reshaping the global economy. His policies create trade disputes and impact traditional markets.
A First in Fed History
Recently, Trump signed an order dismissing Federal Reserve (Fed) member Cook, who is currently under criminal investigation. This decision was unexpected, as the FHFA Director had previously stated intentions to refer Cook's case to the Justice Department. Traditionally, dismissals occur only after a conviction, yet Trump's rapid action raises significant concerns.
What Was the Crime?
Trump cited justifiable reasons for dismissing Cook, prompting Cook's attorney to initiate legal actions. The central accusation stemmed from FHFA Director Bill Pulte's claims against Cook, stating he declared two properties as his 'primary residence' within a two-week period in 2021—one in Michigan and another in Georgia. Trump characterized this act as 'mortgage fraud', amplifying the legal and ethical implications for Cook.
Will Interest Rates Fall?
The Fed’s interest rate decisions involve seven voting members, including Powell. Trump appointed allies such as Bowman, Miran, and Waller, who are in favor of rate reductions. To align with his economic strategies, Trump needs a replacement for Cook, which could signal potential rate cuts in future meetings. Under the Federal Reserve Act, members serve a 14-year term, and removals must be for 'reasonable cause', making Trump's intervention a challenge to this norm.
Donald Trump's actions regarding the Federal Reserve create precedents that may significantly influence future economic decisions and interest rates. The dismissal of Cook opens new avenues for Trump's influence on financial policies.
