President Donald Trump has intensified his confrontation with the U.S. Federal Reserve by seeking to dismiss Governor Lisa Cook, citing unproven mortgage-fraud allegations. The move follows weeks of public attacks in which Trump accused the central bank of keeping interest rates too high and blamed it for swelling government debt-service costs. The Federal Reserve, through a spokesperson, said it "will abide by any court decision," underscoring that governors can be removed only "for cause" under the Federal Reserve Act—a standard no president has previously tested. Legal scholars say the dispute will likely be resolved in federal court and could establish the first clear precedent on presidential power over the central bank’s board. Investors and policy makers warn that meddling with the Fed’s leadership risks eroding confidence in the world’s most important central bank. Analysts at Bloomberg and the Financial Times say the campaign could drive long-dated Treasury yields higher by casting doubt on monetary-policy independence, while European Central Bank official Olli Rehn cautioned that undermining the Fed could have “substantial global effects” on financial markets and the real economy.
ECB's Rehn warns that pressure from Trump on the Federal Reserve's independence could have significant global impacts on financial markets and the real economy.
ECB's Rehn: Euro area growth has proven more resilient than expected https://t.co/H7ZcBHfln2
ECB's Rehn: Euro area inflation being at its 2% target is linked to the ECB's independent decision-making