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    Trump faces key legal test in effort to exert control over Federal Reserve

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    Donald Trump’s battle to exert control over the Federal Reserve faces a key legal test today, with a governor of the central bank seeking a temporary block on his extraordinary attempt to fire her.Lisa Cook sued the US president on Thursday, with her lawyers describing his attempt to dismiss her as “unprecedented and illegal”, and based on “pretextual” allegations.The case is widely expected to be ultimately decided by the supreme court. While it makes it way through the courts, Cook is seeking a temporary restraining order against Trump’s attempt to “immediately” dismiss her from the Fed’s board.A hearing on the motion is set for 10am in Washington on Friday. The case has been assigned to US district judge Jia Cobb, an appointee of Joe Biden.Trump wrote to Cook on Monday, telling her that he was removing her from her position “effective immediately”, based on the allegation from one of his allies that she had obtained a mortgage on a second home she incorrectly described as her primary residence.The president has spent months attacking the Fed, where most policymakers – including Cook – have so far defied his calls for interest rate cuts. He has spoken of rapidly building “a majority” on the central bank’s board, calling into question the future of its longstanding independence from political oversight.Firing Cook, whose term is not due to expire until 2038, would enable Trump to nominate a replacement. But she has argued the president has “no authority” to remove her.“An unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not [cause],” her lawyers argued in the complaint. “President Trump’s letter purporting to fire Governor Cook did not cite appropriate cause for removing her from the board of governors.”The White House claimed on Thursday that Cook had been “credibly accused of lying” by the administration. But the accusations are unconfirmed, and her lawyers said Trump and his officials had not explicitly alleged that any error on her mortgage paperwork was intentional.It comes as the Fed gears up to resume rate cuts as soon as next month, albeit not at the scale or pace Trump has repeatedly demanded – and its chair, Jerome Powell, has cautioned that the president’s tariffs and immigration crackdown have disrupted the global economy and knocked the US labor force. More

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      Trump is out to end the Fed’s autonomy. Here’s how he’s trying to get his way

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      When Donald Trump stepped up his campaign to influence the US Federal Reserve, he traveled less than a mile from the White House, to tour the central bank’s headquarters. But as the administration considers how to actually get what it wants, one of the US president’s acolytes looked about 500 miles south.A condominium above the Four Seasons hotel in Atlanta, Georgia, is at the heart of an extraordinary battle over the future of the Fed, and the independence of its power of the world’s largest economy.For a generation, presidents have respected the Fed’s autonomy. They might disagree with its decisions. But they allowed it to make long-term calls in the best interest of the economy, even if they caused short-term political discomfort.Trump has ignored this precedent.Since returning to office in January, he has lambasted the Fed publicly and relentlessly – calling its chairperson, Jerome Powell, a “moron”, a “numbskull” and a “disaster” – and accused the central bank of damaging the US economy by failing to cut interest rates.As the Fed declined to lower rates at five consecutive meetings, Trump escalated his attacks, even suggesting (without evidence) that multi-billion dollar renovations of its Washington headquarters were tantamount to fraud.But policymakers held the line. With most rate-setting officials wanting to wait and see the impact of Trump’s policies – from trade wars to deportations – on the economy, they sat on their hands.While the Fed might be on the cusp of resuming rate cuts, Powell has made clear rates are unlikely to fall as drastically as the president wants.So how does Trump actually get what he wants?Back to that condo in Atlanta. It was allegedly bought by Lisa Cook, a respected economist appointed by Joe Biden to serve on the Fed’s board of governors, in July 2021. Trump’s officials claim she took out a mortgage which listed the property as her primary residence – two weeks after taking out another mortgage, which listed a property in Ann Arbor, Michigan, as her principal residence.The allegations – similar to those that the administration has leveled against other opponents – are unconfirmed. But that didn’t stop Trump from immediately demanding Cook’s resignation.When Cook refused to be “bullied”, he tried to fire her. Cook has insisted Trump has no authority to do so, and her attorney has pledged to sue the administration over its bid to remove her from her post.The Fed’s rate-setting Federal Open Market Committee (FOMC) is in Trump’s sights. There are 12 seats around the table, filled by five representatives of local reserve banks and seven governors.Fed governors, once appointed, are hard to replace. A full term lasts 14 years, enabling them – in theory – to take a longer view on the economy than, say, presidential administrations working on four-year cycles.Cook’s term is not due to expire until 2038. It now appears likely that her future at the Fed will be settled in court. But Trump’s bid to exert control over the central bank, and its rate-setting committee, does not end there.He has already nominated one ally to sit on the Fed’s board of governors, following the exit of Adriana Kugler, another Biden appointee, earlier this month. Two other governors have already publicly sided with the president on rate cuts, and reportedly made the administration’s shortlist of potential successors to Powell.Powell’s term as Fed chair is due to end in May. His term as a governor is not due to expire until January 2028, but departing chairs have typically left the board at the same time.The Fed has so far defied Trump’s demands. But each departure enables him to build his influence over its policy committee – with view to obtaining an outright majority. Like the supreme court, these nominations have implications for years to come.The administration is arguing a mortgage on a condo in Atlanta should allow it handpick another official to join the Fed’s board. Who knows what the next purported reason will be, should it have another go.Trump has made no secret of this plan. “We’ll have a majority very shortly,” he claimed to reporters at a cabinet meeting on Tuesday. “So that’ll be great.”Of course, receiving his backing today does not guarantee his support tomorrow.Eight years ago, when he tapped Powell to lead the Fed, the president delivered a strikingly different verdict to the ones he now routinely publishes on social media. “He’s strong, he’s committed and he’s smart,” said Trump. More

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      What Trump’s move to fire Fed governor means for central bank’s independence

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      Donald Trump has said he is firing Lisa Cook, a Federal Reserve governor, in a move viewed as a sharp escalation in his battle to exert greater control over the independent institution.Trump said in a letter posted on his Truth Social platform that he is firing Cook because of allegations she committed mortgage fraud. The allegation was made last week by Bill Pulte, a Trump appointee to the Federal Housing Administration, an agency that regulates mortgage giants Fannie Mae and Freddie Mac.Cook previously said she would not leave her post.Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him. Powell, who has previously warned that tariffs will push up inflation, told the Jackson Hole economic symposium in Wyoming last week that the Fed could soon change its policy stance.Powell’s caution has infuriated Trump, who has demanded the Fed cut borrowing costs to spur the economy and reduce the interest rates the federal government pays on its debt. Trump has also accused Powell of mismanaging the US central bank’s $2.5bn building renovation project.Firing the Fed chair or forcing out a governor threatens the Fed’s venerated independence, which has long been supported by most economists and Wall Street investors. Here’s what to know about the Fed:The Fed wields extensive power over the US economy. By cutting the short-term interest rate it controls – which it typically does when the economy falters – the Fed can make borrowing cheaper and encourage more spending, accelerating growth and hiring. When it raises the rate – which it does to cool the economy and combat inflation – it can weaken the economy and cause job losses.Economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation, such as raise interest rates, which makes borrowing to buy a home, car, or appliance more expensive.The importance of an independent Fed was cemented for most economists after the extended inflation spike of the 1970s and early 1980s. Arthur Burns, former Fed chair, has been widely blamed for allowing the painful inflation of that era to accelerate by succumbing to pressure from Richard Nixon to keep rates low heading into the 1972 election. Nixon feared higher rates would cost him the election, which he won in a landslide.Paul Volcker was eventually appointed chair of the Fed in 1979 by Jimmy Carter, and he pushed the Fed’s short-term rate to the stunningly high level of nearly 20%. (It is currently 4.3%). The eye-popping rates triggered a sharp recession, pushed unemployment to nearly 11% and spurred widespread protests.Yet Volcker didn’t flinch. By the mid-1980s, inflation had fallen back into the low single digits. Volcker’s willingness to inflict pain on the economy to throttle inflation is seen by most economists as a key example of the value of an independent Fed.An effort to fire Powell would almost certainly cause stock prices to fall and bond yields to spike higher, pushing up interest rates on government debt and raising borrowing costs for mortgages, auto loans and credit card debt. The interest rate on the 10-year treasury is a benchmark for mortgage rates.Most investors prefer an independent Fed, partly because it typically manages inflation better without being influenced by politics but also because its decisions are more predictable. Fed officials often publicly discuss how they would alter interest rate policies if economic conditions changed.If the Fed was more swayed by politics, it would be harder for financial markets to anticipate – or understand – its decisions.The supreme court in a ruling earlier this year suggested that a president can’t fire the chair of the Fed just because he doesn’t like the chair’s policy choices. But he may be able to remove him “for cause”, typically interpreted to mean some kind of wrongdoing or negligence.It’s a likely reason the Trump administration has zeroed in on the building renovation, in hopes it could provide a “for cause” pretext. Still, Powell would likely fight any attempt to remove him, and the case could wind up at the supreme court. More

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      ‘Pattern of lawfare’: Trump is targeting opponents with mortgage fraud claims

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      Donald Trump and his allies have been accused of executing a “pattern of lawfare” akin to those exerted by authoritarian regimes in Hungary and Russia after adopting a new strategy to target political opponents: allegations of mortgage fraud.First it was Letitia James, the New York attorney general, then it was Adam Schiff, a California senator. Now, the president is targeting Federal Reserve governor Lisa Cook, demanding she resign and threatening to fire her.Cook, the first Black woman to be appointed a Fed governor, was appointed in 2022 by Joe Biden. Her 14-year term is not due to expire until 2038.Leading this new strategy is Bill Pulte, heir to a home construction company fortune, appointed by Trump to lead the Federal Housing Finance Agency, which oversees regulations of federal housing lenders Fannie Mae and Freddie Mac.Pulte has used his role to publicly accuse Trump’s opponents, publishing extraordinary allegations on social media and referring them for investigation.He alleges that James, Schiff and Cook committed what is known as owner-occupancy fraud, when a person claims a second home or investment property is actually a primary residence to get better mortgages. Lenders are more inclined to give borrowers a lower mortgage on a primary residence, compared with a second home or investment property.In a letter to the Department of Justice, Pulte claimed that Cook “falsified bank documents and property records to acquire more favorable loan terms”. In other online posts and on TV news appearances, Pulte said that Cook should resign or be fired over the allegations, which have not been verified.James and Schiff have denied the allegations. Cook has pledged to “provide the facts” after gathering the relevant information.Trump allies have celebrated the accusations, citing it as evidence of corruption within the Democratic party. “This is not just hypocrisy, this is poetic justice,” said Fox conservative commentator Laura Ingraham, of Schiff’s fraud accusations, in a clip Trump reposted to social media.While Pulte has targeted two prominent Democrats and a Democratic appointee, accusations of such fraud are not exclusive to the party: an investigation by the Associated Press found Texas attorney general Ken Paxton, a Republican and staunch Trump ally, and his then wife claimed that three homes were their primary residences.View image in fullscreenThough Paxton has not commented on his own mortgage fraud accusations, he had said of the accusations against attorney general James: “I hope that if she’s done something wrong, I hope that she’s held accountable.”Owner-occupancy fraud is not uncommon. Philadelphia Fed researchers in 2023 estimated that over 20,000 loans were given to “fraudulent investors”, or people who purchased more than one home they listed as a primary residence within a year.Some political experts have raised concerns that the president and his allies are blatantly using the legal system to intimidate political opponents. “The fact that the law is being selectively applied underlines that this is part of a pattern of lawfare,” Don Moynihan, a professor of public policy at the University of Michigan, told the Guardian via email.“What we are seeing is the type of weaponization we associate with authoritarian regimes, like Hungary, Turkey or Russia,” Moynihan added. “I would say that this is a massive warning sign, but the reality is that we have seen so many of these signs at this point.”Contacted for comment, a US federal housing spokesperson said: “We refer people of all political parties for mortgage fraud, and we will continue to do so.”A White House official said: “Anyone who engages in criminal activity should be held accountable. No one is above the law.”‘No intention of being bullied’That Trump is targeting a Fed governor speaks to the president’s continued antagonism against the Federal Reserve. Compared with James or Schiff, both of whom have headed investigations against Trump, Cook has not singled herself out as an enemy to the president.But her role on the 12-person Fed governing board that sets interest rates has probably made her a target. Since taking office in January, Trump has demanded the central bank cut rates, disregarding the precedent set by his predecessors; the Fed has historically been treated as an independent institution, free from political influence, by past presidents.The Fed board hasn’t yet lowered rates during any of the five meetings it had this year, which has infuriated Trump. Policymakers, including the central bank’s chair, Jerome Powell, say the administration’s tariffs have clouded the economic outlook and raises the risk of higher inflation.Pulte has pushed himself into the heart of the action, criticizing the Fed on social media and reportedly even drafting a letter for Trump – which remains unsent – to fire Powell. “Jerome Powell’s career is done,” Pulte wrote in July.View image in fullscreen“Could somebody please inform Jerome ‘Too Late’ Powell that he is hurting the housing industry very badly? People can’t get a mortgage because of him,” Trump wrote on social media earlier this week.Trump’s gut-reaction to seize control of the Fed is to fire Powell, but neither the stock market nor the US supreme court have responded kindly to such threats. So, Trump, with Pulte’s help, has spent the summer following other tactics.In July, Trump zeroed in on renovations that were taking place at the Fed’s headquarters in Washington DC, claiming that the renovations were fraudulent because they were more expensive than what was originally budgeted, costing $2.5bn instead of $1.9bn. The Fed put this down to complications that came up during renovations.But as criticisms of the renovations died down, Trump started zeroing in on Cook. Her exit would allow Trump to appoint a replacement who may be more sympathetic to his desire for lower rates.In a statement, Cook said that she has “no intention of being bullied to step down from my position because of some questions raised in a tweet”, adding: “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”On Friday, Trump threatened to fire her if she did not resign. More

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      Now’s the time for Democrats to hammer Trump on the economy | Lloyd Green

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      “Economic Growth Shatters Expectations as President Trump Fuels America’s Golden Age,” the White House announced on Wednesday. But within 48 hours, the data told a very different story, giving the Democrats a badly needed opening if they can muster the competence and focus to seize upon it.On Thursday, the US commerce department announced that inflation had ticked up to 2.6%. A day later, the labor department reported that unemployment had risen to 4.2% in July, and that the US had actually gained 258,000 fewer jobs than previously reported.From the looks of things, Donald Trump and his tariffs are damaging the economy. Suddenly, things aren’t looking so hot.Rather than copping to a screw-up, however, the president immediately laid blame elsewhere. In a barrage of posts on social media, he lambasted Jerome Powell, the chair of the Federal Reserve, attacked his intelligence and again threatened his tenure at the Fed.The president trashed Powell, who he appointed, as “a stubborn MORON”. Adding insult to injury, Trump brayed: “IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!”But things didn’t end there. The tantrum continued unabated.Hours later, Trump grabbed another page from the strongman playbook and fired Erika McEntarfer, the head of the Bureau of Labor Statistics. He suggested that she had cooked the books and was essentially giving aid and comfort to Joe Biden, the man who first appointed her.As we know, there is reality and then there is Trump’s version of reality.At Friday’s final bell, the Dow had dropped more than 540 points and the Nasdaq was down 2.24%. The ghost of Trump’s so-called “liberation day” had returned to haunt the markets, giving the Democrats ample material to work with.Already, the One Big Beautiful Bill Act places Trump and the Republicans at odds with their base and with swing voters. According to a Wall Street Journal poll, 70% of the US believes the act benefits the rich. Beyond that, the tax plan is underwater with the public, 42-52, and is disfavored by a majority of independents.Practically speaking, the Congressional Budget Office projected in June that nearly 8 million people would lose their insurance under the Trump-backed bill. For the current iteration of the GOP, that’s a problem. These days, Republican voters tilt working class. Many of them break economically liberal and socially conservative.This why House Republicans danced around the issue of coming Medicaid cuts. They stand to harm their own voters. And they know it.Take Mike Lawler, a representative from New York’s Hudson Valley. More than 200,000 of his constituents receive Medicaid benefits. Town halls in his district have become rowdy events, with the police hauling out a constituent.Lawler claims to have “fought extensively to make sure that there were not draconian changes to Medicaid”.“At the end of the day, this is about strengthening the program,” Lawler added. Uh, that’s why he needed the cops.More than 64 Republican House members represent districts where Medicaid rates exceed the national average, according to CNN. In those seats, five incumbents won last November by five points or fewer.But the GOP’s problems don’t end with Medicaid. These days, social security, the most sacrosanct legacy of the New Deal, may be in the crosshairs of Team Trump.On Wednesday, Scott Bessent, the treasury secretary, acknowledged the so-called “Trump accounts” created for kids by the One Big Beautiful Bill Act were actually a “back door for privatizing social security”.The accounts are designed as a vehicle for Americans to build and accumulate wealth as soon as they are born. Under the new law, newborns will be eligible to receive $1,000 from Uncle Sam.“Social security is a defined benefit plan paid out,” Bessent explained. “To the extent that if all of a sudden these accounts grow, and you have in the hundreds of thousands of dollars for your retirement, then that’s a gamechanger.”As a candidate and then again in office, Trump had pledged to leave social security untouched. Now that pledge is in doubt.In 2024, the Republicans made the economic failures of the Biden-Harris administration central to their campaigns. The Trump-Vance campaign raked the Democrats over the coals over inflation. In politics, turnabout is fair play. It is time for the Democrats to show that they actually care about the average voter.

      Lloyd Green is an attorney in New York and served in the US Department of Justice from 1990 to 1992 More

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      Stephen Colbert on Trump’s Epstein controversy: ‘Desperately looking for a scapegoat’

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      Late-night hosts dig into Donald Trump’s growing anxiety over the Jeffrey Epstein files and his beef with the Federal Reserve chair, Jerome Powell.Stephen ColbertOn Thursday evening, Stephen Colbert announced that the Late Show would end in May 2026, owing to a decision by the CBS parent company, Paramount. Though Paramount said the decision was “purely financial”, the cancellation comes just three days after Colbert openly criticized the company for settling a lawsuit with Donald Trump for $16m.The settlement coincided with Paramount seeking approval from the Trump administration for an $8.4bn merger with Skydance Media. Colbert called the settlement “a big fat bribe”.In a separate message to viewers on Thursday, Colbert said he was informed of the decision the night before. “Yeah, I share your feelings,” he said as the audience booed.“It’s not just the end of the show, it is the end of the Late Show on CBS. I’m not being replaced, this is all just going away,” he added. “Let me tell you, it is a fantastic job. I wish someone else was getting it. And it is a job I am looking forward to doing with this usual gang of idiots for another 10 months.”During his monologue, Colbert focused on the Jeffrey Epstein controversy consuming the White House, and “causing so much trouble for Trump that he recently ordered it to be put in a cell and for the cameras to stop working for three minutes”.“Maga is furious because they think Trump is refusing to release the Epstein files,” he explained. “In response, Trump has been saying that there are no credible files, and if there are, they’re really boring, and also Obama made them up.“That part is true, and you can read them on Obama’s annual summer Epstein client list,” he joked.“As crazy as it is, Trump is going all in on the idea that his followers have fallen for a nefarious Democratic scheme.” As Trump said in the Oval Office on Wednesday: “Certain Republicans got duped by the Democrats, and they’re following the Democrat playbook.”“That is ridiculous – the Democrats have never had a playbook,” Colbert joked. “It’s improv, baby!“Trump is desperately looking for a scapegoat,” so on Wednesday, he fired the Manhattan prosecutor who handled the Epstein case and “pulled the Uno reverse card”, calling on the FBI to investigate “this Jeffrey Epstein hoax”.“By which he evidently means he wants the FBI to investigate the folks who investigated Jeffrey Epstein’s sex trafficking,” Colbert said, “which is weird, but we could get a whole new spinoff of To Catch a Predator.”Seth MeyersTrump “is under a lot of pressure from all this Epstein stuff. Even his most devoted supporters are trashing him and demanding answers,” said Seth Meyers on Thursday’s Late Night before clips of numerous Republicans demanding answers and even calling for an independent special counsel.In an interview with a far-right media network, Trump called the Epstein files a “scam” that’s “all put out by Democrats, some of the naive Republicans fall right into line like they always do”.“Fall in line with what?” an exasperated Meyers asked. “Democrats didn’t say a word. Your own supporters are the ones who spent years demanding the files and obsessing over the Epstein case, which was a very real criminal case involving a very real person, and now you’re the one fanning the flames of the conspiracy by calling it all a hoax. I swear we’re like a day away from Trump claiming Jeffrey Epstein was never even a real person.”Meyers also homed in on the far-right interviewer who validated Trump with “they definitely set the Republicans up.”“Set them up how?!” he implored. “We’ve been asking this question all week: how did they set up the Republicans? They made up fake Epstein files, then kept those fake files secret, then convinced the entire Maga base to spend years demanding the release of those files, then knew they would lose the election to Trump, who would then refuse to release the files they made up? You people all need to take a fucking dementia test.”The Daily Show“We all know President Trump has spent the last two weeks in a wrestling match with the ghost of Jeffrey Epstein,” said Jordan Klepper on the Daily Show. “But he’s been fighting the last six months with a much more alive person: Federal Reserve chairman Jerome Powell. And boy does Trump hate the guy.”Klepper played a series of clips in which Trump called Powell a “stupid person”, an “average, mentally, person. I’d say low at what he does” and a “numbskull … you talk to the guy and it’s like talking to nothing. It’s like talking to a chair.”“Yeah! Whatever happened to all of our exciting, dynamic Federal Reserve chairs?” Klepper joked.“The way Trump talks about him, you’d think they caught him at a Coldplay concert with Trump’s wife,” he added. “But at its heart, this is a beef about economics. Trump wants to lower interest rates to help juice the economy, but Jerome Powell is in charge of setting those interest rates, and he refuses to lower them because he’s worried that will increase inflation. And nothing, nothing makes Trump angrier than someone doing their job well.”In another clip, Trump blasted Joe Biden for nominating Powell. Except … Klepper cut to a clip of Trump nominating Powell in 2017, calling him “strong,” “committed” and “smart”.“Damn, Joe Biden looks fat as shit,” Klepper joked. “But also, I get it. I’m also trying desperately to forget everything that happened during Trump’s first term.” More

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      Trump takes on the Fed – but he has little power over central bank, economists say

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      For months, Donald Trump has ranted on social media and, at one point, threatened to fire the Federal Reserve chair, Jerome Powell. Last week, he took on a new, unusual tactic: a handwritten note.“You have cost the USA a fortune and continue to do so. You should lower the rate – by a lot!” Trump wrote to Powell, whom he calls “Too Late” in one of his less compelling nicknames.That Trump has targeted the Fed isn’t surprising. In the midst of Trump’s trade war, consumers and business owners alike have expressed anxiety about the economy. The stock market tanked in April, when the president announced the highest of his tariffs, and only went on the upswing when he pulled back the bulk of his levies.The Fed has the ability to sway the US economy through its ability to adjust interest rates. When rates are high, as they have been for the last few years, borrowing money becomes more expensive. This means higher rates for mortgages, business loans, credit card debt and more. People are less likely to invest when interest rates are high, which can slow activity in the economy. The Fed lowering interest rates would excite investors and spur economic activity, but the price could be steep in the long run.But how much sway does Trump really have over the Fed?While Trump’s aggression toward the Fed, particularly his personal attacks against Powell, are a remarkable departure from the relationship a US president typically has with the Fed, economists say the structure of the central bank limits the amount of power Trump actually has – at least in the short term.Historically, the Fed has been a nonpartisan, independent central bank within the federal government. Economists have found that countries without central banks are prone to high inflation and unemployment.“A central bank’s independence is pretty much the only thing macroeconomists know of that’s a free lunch,” said Jason Furman, a former economic adviser to Barack Obama. “When you look at authoritarian leaders that have effectively taken over the central banks, like in Turkey, you can end up with 70% inflation rates and really, really big economic problems.”In late June, Trump told reporters that he has zeroed in on “three or four people who I’m going to pick” to replace Powell. When the treasury secretary, Scott Bessent, whose name has been floated, was asked if he would take the job, Bessent said: “I will do what the president wants.”That the White House is already talking about replacing Powell almost a year out from the end of his term has raised concerns that a new appointee would act as Trump’s “shadow chair”, or someone who has power over Powell before he leaves office.But those familiar with the Fed’s structure say that a powerful “shadow chair” is unlikely, especially since the Fed’s structure encourages consensus among its leaders.When setting interest rates, the Fed chair doesn’t act alone. The chair is one of 12 members of the Federal Open Market Committee (FOMC), which meets eight times a year to vote on any adjustments to the interest rate.The amount of control Trump has over who gets on to the FOMC is limited. The committee has seven Fed governors who serve 14-year terms. Those governors are appointed by the president and confirmed by the Senate. The other five members are presidents of regional Federal Reserve banks, who are selected within the Federal Reserve system.During the next four years, because of upcoming term limits, Trump will have the ability to appoint two of the 12 members of the FOMC – what would be a small fraction of the committee.“They’re going to have a hard time persuading other people on the committee to go along with anything like what Trump wants,” Furman said.skip past newsletter promotionafter newsletter promotionRyan Sweet, chief US economist for Oxford Economics, said that Fed governors on the FOMC already voice dissenting views on the economy in public, but come together to form a consensus during their meetings.“It’s built [into the Fed] that they go into a meeting and they’ve got to come to a consensus on what the outcome is,” Sweet said.And even though Trump may want to replace Powell before his term is up, the supreme court signaled that the president can’t constitutionally fire him. Sweet pointed out that the court’s preemptive protection of the Fed chair has likely soothed stock markets, which had gone into a panic when Trump first threatened to oust Powell.Powell, whom Trump first appointed in 2018, has publicly resisted the president’s efforts to sway the Fed. He has said he would not step down if Trump asks and has said the Fed will not lower interest rates prematurely, at risk of raising inflation.In his most pointed statement against Trump’s economic policies, Powell said that the Fed paused interest rate cuts “when we saw the size of the tariffs”.“Essentially all inflation forecasts for the United States went up materially as a consequence of tariffs,” Powell said. “We didn’t overreact, in fact we didn’t react at all.” This article was amended on 7 July 2025. Powell said the Fed paused interest rate cuts due to Trump’s tariffs, not interest rate increases. More

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      Federal Reserve issues rare statement asserting independence amid Trump pressure

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      The Federal Reserve issued a rare, strongly worded statement on Thursday after chair Jerome Powell spoke with Donald Trump at the White House on Thursday morning, holding firm on the central bank’s independence amid pressure from Trump to lower interest rates.The three-paragraph statement emphasized the Fed’s independent, non-partisan role in setting monetary policy based on economic data.“Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook,” the statement read.Powell told Trump that he and other Fed officials “will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis”, according to the statement.That the Fed, which tends to be extremely reserved with public statements, issued the brief memo shows that officials are aware of Trump’s pressure campaign and are standing firm on the Fed’s independence.At Thursday’s White House press briefing, press secretary Karoline Leavitt said that the Fed’s statement is “correct” but that Trump “did say that the Fed chair is making a mistake by not lowering rates”.Historically, presidents show deference to the Fed, respecting the central bank’s independence. But over the last few months, Trump has tried to publicly pressure Powell to lower interest rates, as the Fed did last year, though officials say that the economy – thrown into a tailspin from Trump’s trade war – has become too unstable to continue lowering rates.After Trump’s “liberation day” in early April, when he announced a slate of tariffs that ended up crashing US stock markets, Trump wrote on social media: “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly.”Powell, who was appointed during Trump’s first term in 2018, has resisted the pressure from Trump and has warned that high tariffs could lead to inflation and, earlier in May, said that officials are “in no hurry” to cut interest rates – all statements that seem to have put Trump on edge.“‘Too Late’ Jerome Powell is a FOOL, who doesn’t have a clue,” Trump wrote after the Fed’s meeting.Trump had previously threatened to fire Powell, though it’s unclear whether the president has the power to do so. Last week, the supreme court allowed Trump to follow through on his dismissal of officials on the National Labor Relations Board, the panel that oversees labor disputes, but judges noted that the Federal Reserve is a “uniquely structured, quasi-private entity” – implying that it likely won’t be so easy for Trump to get rid of Powell. More