Trump Removes Fed Governor Cook, Sparks Market Concerns

President Donald Trump's recent firing of Federal Reserve Governor Lisa Cook, based on contested allegations, has intensified concerns about the Fed's independence and its credibility. While the dismissal alone may not fully compromise the Fed's autonomy, it has increased market volatility and shaken confidence in the institution's political insulation. Experts emphasize that the broader threat to Fed independence stems from fiscal dominance, where growing public debt and government fiscal policy increasingly influence monetary policy decisions, limiting the Fed's ability to act solely on economic grounds. Instances such as the Bank of England's 2022 bond market intervention illustrate how fiscal decisions can force central banks to delay inflation control measures. Cook's legal challenge against her removal underscores the unprecedented nature of this conflict and highlights the fragility of the Fed's independence myth. The unfolding situation raises critical questions about the future relationship between the White House and the Federal Reserve, and the potential reshaping of U.S. monetary policy under political pressures.