The independence of the Federal Reserve continues to face sustained pressure from the White House.
This week, the U.S. Supreme Court temporarily blocked former President Trump's attempt to dismiss Federal Reserve Governor Lisa Cook. However, this ruling has not dampened the administration's resolve; instead, it has provided Trump's allies with a new procedural opening, prompting them to rapidly escalate efforts to exert influence over the central bank.
Following the Supreme Court's decision to keep Cook in her role due to "procedural flaws," Trump stated in a CNBC interview on Thursday that the administration would initiate a new removal process. Trump emphasized that the effort would be procedurally sound and flawless.
According to reports citing informed sources, both Cook and former Fed Chair Jerome Powell are targets, with Trump allies actively exploring new avenues to remove them from the Federal Reserve Board.
Concurrently, the White House views the vacant presidency of the Federal Reserve Bank of Atlanta as another strategic opportunity. Reports indicate that Treasury Secretary Besant is leveraging his network to identify potential candidates for the position.
The Atlanta Fed president is scheduled to vote on interest rates in 2027, and the bank's close tracking and analysis of economic growth is highly valued by Trump's economic policy team.
Legal Setback Fails to Halt Efforts
The U.S. Supreme Court ruled on Monday that former President Trump did not currently have the authority to remove Federal Reserve Governor Lisa Cook from her position.
Chief Justice John Roberts explicitly noted in the opinion that the ruling was specific to the circumstances of this case and did not set a broader precedent.
The court found that Trump had not afforded Cook due process. The ruling did not make a substantive judgment on whether the allegations against Cook constituted sufficient legal grounds for dismissal.
Sources indicate that allies of the former president now view this ruling as a procedural guidebook and are studying how to advance removal efforts while adhering to legal requirements. Even if a future attempt might again face legal challenges, the administration shows no intention of backing down.
Trump moved to oust Cook last August, citing alleged "mortgage fraud"—an unprecedented action in Fed history. Cook has denied the allegations and sued to block the removal, a case that ultimately reached the Supreme Court.
Powell's Continued Tenure Draws Scrutiny
Analysis suggests that Jerome Powell's position is also increasingly precarious.
Multiple sources report that Trump is deeply dissatisfied with Powell remaining on the Federal Reserve Board as a governor after his term as Chair concluded.
Powell's remarks at the John F. Kennedy Profile in Courage Award ceremony in late May, where he praised Congress for "wisely" insulating monetary policy from political pressure, reportedly angered Trump.
A statement from the Director of the White House National Economic Council expressed concern about Powell's continued presence on the Board.
The official suggested that the voting motivations of some within the Fed were driven by opposition to Trump rather than by public interest.
Powell's term as a governor extends to 2028. He has previously stated he intends to maintain a low profile but has also indicated that the administration's persistent legal pressure contributed to his decision to stay.
Powell has characterized a prior criminal investigation by the Justice Department into cost overruns on a $2.5 billion renovation of the Fed's Washington headquarters as retribution for the central bank's refusal to set interest rates according to Trump's wishes.
Although a federal prosecutor stated in April that the investigation had been closed, she also noted that an upcoming inspector general's report would be reviewed, leaving open the possibility that the probe could be revived.
Reports indicate that White House officials and allies are pinning hopes on the inspector general's report or other avenues to find grounds for pushing Powell out.
Atlanta Fed: An Alternate Path for Influence
The contest over regional Federal Reserve Bank presidencies represents another front in Trump's efforts to reshape the Fed's influence.
The vacancy at the Atlanta Fed arose after former President Raphael Bostic stepped down in February. Bostic had frequently publicly emphasized the tail risks of inflation.
Sources indicate that by May, the search for his replacement had entered an advanced stage.
However, with the imminent formal nomination of the new Chair, two Trump-appointed officials advised pausing the selection process to ensure the incoming Chair would have input on the final candidate.
The selection process has recently resumed. Sources report that the incoming Chair is seeking candidates with private-sector leadership experience.
Regional Fed presidents are appointed by local boards, with candidates subject to approval by the Federal Reserve Board in Washington. The chair of the Atlanta Fed's board stated the bank is committed to a proper process to select the best candidate to serve the Sixth District.
Dimming Rate Cut Outlook Amid Persistent Political Pressure
The White House's ongoing pressure on the Fed is set against a backdrop of diminishing prospects for interest rate cuts this year.
According to the Fed's June projections, nearly half of its officials believe a rate hike this year may be necessary, with inflation concerns troubling several regional Fed presidents.
A White House spokesperson declined to comment on specific reports but stated that the administration's supply-side policies were cooling inflation and paving the way for rate cuts, expressing full confidence in the incoming Chair.
The nominee had previously voiced support for lowering interest rates during the nomination process, aligning with Trump's stance.
However, the resurgence of inflationary pressures raises significant questions about the administration's intent and ability to steer monetary policy through personnel appointments.
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