Following a U.S. Supreme Court ruling this week that thwarted former President Trump's attempt to dismiss Federal Reserve Governor Lisa Cook, he and his allies are renewing their efforts to reshape the central bank.
Informed sources reveal that senior figures in Trump's circle and external allies are actively exploring ways to replace members of the Federal Reserve Board in Washington, aiming to install more individuals aligned with Trump's preferences. According to anonymous insiders, Cook remains a target for removal despite the Supreme Court's temporary order allowing her to stay, as does former Chair Jerome Powell.
Although the Supreme Court's decision reinforced the Fed's independence from the executive branch, some observers note its limited scope, warning it does not fully shield the institution from future political attacks. Furthermore, sources indicate Trump's allies are undeterred; they view the ruling as providing a procedural roadmap for successfully removing Cook and are intensifying their push on this front.
In an interview on Thursday, Trump stated the Supreme Court's decision was based on procedural, not substantive, grounds and announced his administration would initiate the process to remove her.
"We will start the process, and we will do it perfectly, procedurally perfect," he said.
Sources also note that the vacant presidency of the Federal Reserve Bank of Atlanta is seen by Trump's team as another opportunity to expand influence over the Fed. Treasury Secretary Scott Bessent is reportedly using his connections to identify potential candidates. Within Trump's economic policy team, the Atlanta Fed president is viewed as a crucial role due to the bank's responsibility for publishing closely watched analyses on economic growth.
The Atlanta Fed president will also gain a vote on interest-rate decisions in 2027.
Since his return to the White House last year, Trump has increased pressure on the Fed, repeatedly criticizing Powell publicly for not cutting interest rates quickly enough. Trump has openly stated he considered firing the former chair and made clear he would select a successor more aligned with his economic views. His eventual nominee, Kevin Warsh, appeared to share Trump's view that rates should be lower prior to his nomination. Warsh is the current Fed Chair.
However, with inflationary pressures re-emerging, the likelihood of rate cuts this year is diminishing. According to projections released in June, about half of Fed officials now believe the central bank may need to raise rates this year. Several Fed bank presidents are among the policymakers most concerned about the inflation outlook.
White House spokesperson Kush Desai did not directly comment on the views presented in this report.
Desai stated that President Trump and administration officials have consistently conveyed the same message: everyone has full confidence in Chair Kevin Warsh, and despite temporary disruptions in energy markets, the Trump administration's supply-side policies are cooling inflation, paving the way for rate cuts. The Treasury Department did not respond to requests for comment.
Regarding Powell's continued service as a governor after his term as chair ended, several individuals close to Trump revealed this still greatly angers the former president. Particularly galling to Trump was Powell's acceptance of the John F. Kennedy Profile in Courage Award in late May, which honored his exemplary leadership of the Fed and praised Congress for wisely "insulating monetary policy decisions from political pressure."
White House National Economic Council Director Kevin Hassett publicly criticized Powell this week for remaining at the Fed, arguing it hinders the Trump administration's ability to nominate others to the board.
"Powell staying on makes me very nervous," he said on Fox Business on Wednesday. "The majority of the Fed's internal members, when they vote, it's not necessarily out of patriotism, it's against Trump."
Fed chairs typically leave the central bank when their term ends, but Powell chose to remain as a governor, with his term lasting until 2028. Powell stated he would maintain a low profile in his continued role but noted, when announcing his decision to stay, the ongoing legal pressure the administration is applying on the Fed.
This precedes a criminal investigation by the U.S. Justice Department into Powell's handling of the Fed's $2.5 billion, significantly over-budget headquarters renovation in Washington. Powell believes this investigation is a consequence of the Fed's refusal to set interest rate policy according to Trump's preferences. A report by the Fed's inspector general on the renovation is expected later this month.
Jeanine Pirro, the U.S. Attorney for the District of Columbia, said in April she was dropping the investigation but added she would evaluate the inspector general's findings, leaving open the possibility it could be reopened.
Sources indicate that Trump administration officials and their allies hope to find an opening, whether through the inspector general's report or other means, that would allow the White House to remove Powell.
Comments