Attacks on the Fed
Trump has pressured the Fed to reduce interest rates, since, according to the president, this measure would boost the economy.
The New York politician attempted to oust Federal Reserve Governor Lisa Cook over alleged mortgage irregularities, sparking a legal battle that will likely be crucial in determining how much discretion the president has in removing senior officials from the central bank, an independent body of the government in power.
The Trump administration has also launched an investigation into Powell over reforms at the Federal Reserve headquarters, in a probe that the current Fed number one has denounced as a threat to the bank’s independence.
Indeed, these months of Trump’s personal attacks on central bank governors have fueled widespread fear among investors that the Fed’s independence of monetary policy judgment is under threat, which could pose a risk to inflation in the world’s largest economy.
The Fed has two mandates: keep inflation at bay and seek full employment, and its action tool par excellence is interest rate levels.
