Trump’s assault on the Fed’s political autonomy

US PRESIDENT Donald Trump’s attempt to fire Federal Reserve governor Lisa Cook represents an extraordinary test of the central bank’s institutional integrity and the limits of presidential power. This unprecedented move has ignited a constitutional crisis that will likely reshape the relationship between the executive branch and America’s monetary policy institution.

The dispute centres on a fundamental question: Can a sitting president remove a Federal Reserve governor at will? Cook, who was appointed by former president Joe Biden in 2022 and is the first Black woman to serve on the Fed board, has categorically rejected Trump’s authority to fire her. Her legal challenge argues that Fed governors can only be removed “for cause” under specific statutory provisions – not at the president’s discretion.

This legal battle cuts to the heart of the Fed’s design as a politically insulated institution. Since its creation in 1913, the Fed has operated under the principle that monetary policy should be insulated from short-term political pressures. Fed governors serve 14-year terms precisely to shield them from electoral cycles and partisan influence.