Trump fires Fed governor Lisa Cook; dramatic escalation in fight for control over US central bank

In a significant move that underscores Donald Trump's ongoing efforts to influence the Federal Reserve, he announced the dismissal of Governor Lisa Cook late August 25 evening. This decision marks a dramatic escalation in the president's campaign to exert more control over the nation's monetary policy, an area traditionally regarded as insulated from the whims of partisan politics.

The implications of this development could resonate throughout the financial markets and the broader economy, as the Fed plays a crucial role in shaping fiscal policy and ensuring economic growth.

In a letter shared on his Truth Social platform, Trump cited allegations of mortgage fraud against Cook as the primary reason for her termination.

The accusations, which surfaced last week, were brought to light by Bill Pulte, a Trump appointee with connections to the regulatory agency overseeing the mortgage giants Fannie Mae and Freddie Mac. Pulte's claims have ignited a firestorm of controversy, raising questions about the integrity and oversight of financial regulators.

Cook, who made history as one of the first Black women to serve on the Federal Reserve Board, has faced scrutiny since her appointment, but the allegations of fraud have taken the discourse to a new level.

Critics of Trump's intervention argue that such actions undermine the independence of the Federal Reserve, a critical institution responsible for managing the nation's monetary policy, including interest rates and inflation control.

The firing of Cook is part of a broader trend of increased politicisation within the Federal Reserve, which has historically operated free from direct political pressures. Observers are concerned that Trump's aggressive stance could set a precedent that might destabilise the Fed's long-standing reputation for independence, potentially impacting economic stability.