"Trump's Fed Power Play Sparks Global Warning"

Scott Bessent, U.S. Treasury Secretary, emphasized the importance of the Federal Reserve’s independence while defending President Donald Trump’s decision to fire Fed Governor Lisa Cook over alleged mortgage fraud. Speaking during an interview, Bessent acknowledged that the Fed has “made a lot of mistakes” but reiterated that its independence is essential to maintaining global financial stability. The controversy surrounding Cook’s removal has drawn legal and political scrutiny, with her legal team arguing that the president lacks the authority to dismiss her under the Federal Reserve Act [1].

Cook, the first Black woman to serve on the Fed’s Board of Governors, faces allegations that she misrepresented property details on mortgage applications in 2021—claims that occurred before her confirmation by the Senate. The Fed has not conducted an independent review of these allegations, a point Bessent noted with surprise. Cook has denied the allegations, but the Trump administration insists the behavior, if true, constitutes grounds for removal [1].

The president’s broader criticism of the Fed extends beyond Cook. Trump has consistently pressured Fed Chair Jerome Powell to lower interest rates, arguing that high rates hinder economic growth and increase borrowing costs for the government. Bessent reportedly advised Trump against removing Powell, citing potential economic consequences and prolonged legal disputes. The president has publicly threatened to fire Powell, though he has also retracted such statements in recent weeks [2].

The political tensions have drawn international attention, with European Central Bank President Christine Lagarde warning that any erosion of the Fed’s independence could pose a “very serious danger” to the global economy [3]. Lagarde emphasized that the U.S. economy’s size and influence mean its monetary policy has far-reaching effects. She noted that the Supreme Court has established that Fed governors can only be dismissed for “gross misconduct,” which complicates Trump’s ability to assert control over the central bank [4].

Lagarde also highlighted the difficulty of Trump securing a majority on the Fed’s board, given its composition that includes regional bank governors not directly appointed by the president. This structural design is intended to prevent political interference in monetary policy. Despite this, the administration has moved to replace outgoing Fed member Adriana Kugler with Stephen Miran, the chair of the White House Council of Economic Advisers, to maintain political influence within the Fed [1].

The Fed’s current stance on interest rates remains cautious, maintaining a target range of 4.25% to 4.5%. Market analysts expect a rate cut later in the year, but it is unlikely to meet the scale Trump desires. As political pressure mounts, the central bank’s ability to act independently may be tested further, with implications not just for the U.S. but for global financial markets [4].

Source:

[1] Federal Reserve should be independent, Scott Bessent says (https://www.usatoday.com/story/news/politics/2025/09/02/federal-reserve-independent-scott-bessent/85934806007/)

[2] Scott Bessent: Federal Reserve should be independent but ... (https://thehill.com/homenews/5482194-trump-defends-fed-independence-fires-cook)

[3] US Fed loss of independence a serious danger, says ... (https://www.bbc.com/news/articles/c5y3110edzgo)

[4] Trump's war on Fed is 'serious danger' to world economy ... (https://www.theguardian.com/us-news/2025/sep/01/trump-us-fed-ecb-christine-lagarde)