US President Donald Trump has ignited a major political and financial storm after announcing the dismissal of Federal Reserve Governor Lisa Cook, accusing her of committing mortgage fraud.
The decision has been widely condemned by Democrats, legal experts, and market analysts, who describe it as an unlawful attempt to seize control of America’s central bank.
Trump alleged that Cook misrepresented two properties as her primary residences in order to secure more favorable mortgage rates. Cook, who was first appointed to the Fed in 2022 and later reappointed under President Joe Biden, firmly denied the accusations and insisted that the president has no legal authority to remove her. She has declared she will not step down, calling the move an unconstitutional interference with the independence of the Federal Reserve.
Democratic leaders immediately rallied in her defense. Senate Majority Leader Chuck Schumer described Trump’s decision as an “authoritarian power grab,” while Senator Elizabeth Warren warned that undermining the central bank for political gain could destabilize the US economy.
Constitutional scholars have also noted that members of the Federal Reserve Board enjoy fixed terms and can only be removed under very limited circumstances, raising serious legal questions about the legitimacy of Trump’s action.
The announcement reverberated through global markets. The US dollar weakened, gold prices rose, and Treasury yields climbed as traders reacted to fears that political meddling could erode confidence in the Fed’s credibility.
Analysts at Deutsche Bank suggested that if Trump succeeds in ousting Cook, he could appoint more governors sympathetic to his preference for lower interest rates, reshaping the board into a more dovish majority. Investors are now placing heightened bets on a possible interest-rate cut at the Fed’s September meeting.
The clash over Cook’s position highlights a broader battle over the independence of America’s central banking system. Economists and historians have warned that political interference in the Fed has, in the past, led to damaging economic outcomes, particularly in the inflation-plagued 1970s.
Trump’s move has therefore raised alarms not only in Washington but also in financial capitals worldwide, where confidence in the Federal Reserve is seen as a cornerstone of global economic stability.
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