Trump declares war on the Fed, creating a titanic struggle for the most important central bank in the world

The term contracts for the S&P 500 fell by 0.13%, and the 5 -year treasure yield increased by 1.4% as the obligations sold. The dollar dropped 0.16% against the euro and 0.29% compared to the yen.

While investors care about the Fed which makes political decisions rather than economic, they will require higher yields on obligations and question the status of the dollar as a global reserve control.

“In accordance with my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as modified, you are by this of your position within the Council of Governors of the Federal Reserve, with immediate effect,” Trump wrote in a letter published on his social account of truth.

Since his return to the White House, he demanded that the Fed has reduced the rates and regularly insults Jerome Powell so as not to do so. After teasing that Trump would dismiss him, he then fell back.

But last week, Trump threatened to shoot Cook if she did not resign, after an official of administrative housing accused her of mortgage fraud. Cook said that last week, she would not be intimidated to resign and promised to refute the accusations.

A dispute over the ability of a president to withdraw a Fed governor finally appears at the Supreme Court.

Earlier this year, the High Court said that Fed officials had a special status that protects them from limotation unless it was “for good reason”, which was previously interpreted as signifying mischief or failure to duty.

Meanwhile, FED officials will probably surround the wagons as they seek to protect the Central Bank, which is not only a pillar of the American financial markets, but also for the world.

Powell’s mandate as president expires in May, but his mandate as governor extends until 2028. Although the predecessors have traditionally retired from the board of directors at the end of their president, Powell may feel obliged to stay and protect the independence of the Fed now that Trump seeks to move the cooking.

This can also encourage other governors to purge their conditions rather than resign early, which makes Fed more like the Supreme Court in this regard.

Trump has already appointed Stephen Miran, President of the White House economic advisers’ council, to fill a vacancy on the board of directors left by Adriana Kugler, who resigned before the expiration of his mandate in January.

He made Trump’s call at lower prices. More specifically, Miran also co-ordered a newspaper in 2024 calling for an overhaul of the Fed which reduces its independence.

JPMorgan analysts have even warned that Miran’s appointment represents an “existential threat” for the Fed because it signals an intention to modify the law of the federal reserve and to modify the authority of the Central Bank.

It is not clear if Miran will be renowned for the Fed board of directors while the White House is looking for someone to replace Powell as president. But anyway, the Fed will have three governors appointed by Trump.

And if Trump is able to appoint a fourth governor, it would make a base foot of the board of directors of seven members. This is not enough to influence rate decisions within the Federal Open Market Committee of 12 members, but as Axios recently underlined, a majority of the board of directors would give the power of the Trump on the Fed budget, the staff and even the selection of regional presidents of the Fed.

These presidents are appointed by the administrators of the regional banks of the Fed, but they are subject to the approval of the board of directors. And in February, five -year -old mandates for all bank presidents are expected to expire.

Trump crossing a territory Uncharted in his assault against the Fed, any effort to confirm a new candidate of the Fed confirmed by the Senate will now become a total battle.

“The illegal attempt to fire Lisa Cook is the last example of desperate president looking for a scapegoat to cover his own inability to reduce costs for the Americans,” said Senator Elizabeth Warren on Monday evening, classifying Democrat of the Senate Bank, Housing and Urban Affairs.

“It is an authoritarian takeover which openly violates the law on the federal reserve and must be canceled before the court.”