Trump’s Pressure on the Federal Reserve Raises Concerns, but Wall Street Remains Calm
For decades, one principle has stood firm in the U.S. economy: the Federal Reserve’s independence is untouchable. Yet, the Trump administration’s latest efforts to influence the central bank are testing that boundary — and surprisingly, Wall Street isn’t panicking.
Trump Moves Against the Fed
This week, President Donald Trump announced he had fired Lisa Cook, a top Federal Reserve governor, accusing her of mortgage fraud — allegations for which she has not been charged. Cook, however, is fighting back. Her attorney confirmed she plans to sue, while Cook herself has stated she refuses to be pressured into resigning.
But the real issue goes beyond Cook. Trump legally cannot remove Fed Chair Jerome Powell, the real target of his frustration over high interest rates. By attempting to oust Cook, Trump could open the door to nominating another loyalist who favors rate cuts. If successful, his administration would gain more influence over the Fed’s seven-member board and indirectly over the 12 regional Fed presidents who help set monetary policy.
As Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, put it:
“Lisa Cook was likely targeted to reshape the Fed with officials more inclined to cut interest rates. None of us should feel comfortable about what’s happening.”
Wall Street’s Surprising Reaction
Despite the unprecedented move, financial markets barely budged. Stocks held steady, bond yields rose slightly, and major indexes remain near record highs. For now, investors appear unfazed, betting that Trump will either pull back or that the Fed’s institutional framework will limit his reach.
Alex Jacquez of the Groundwork Collaborative compared it to a “boiling frog” moment:
“It’s hard to see what the tipping point will be. As long as markets keep climbing, Trump is being given a pass.”
In fact, some analysts argue that government intervention in markets, combined with the possibility of lower interest rates and potential tax cuts, actually provides short-term benefits for equities.
The Bigger Risk: Politicizing the Fed
Still, critics warn this complacency could have lasting consequences. Katie Martin of the Financial Times noted that markets may be ignoring the existential threat to U.S. institutions:
“Corporate earnings look fine and interest rates may fall soon, so investors are dancing while the music plays — even as the system risks breaking down.”
Dennis Kelleher, CEO of the nonprofit Better Markets, was even more blunt. He criticized Wall Street leaders for staying silent while Trump undermines the Fed’s independence:
“These so-called financial leaders know better than anyone the damage this will cause. If monetary policy becomes politicized, inflation could surge, markets could unravel, and the economy could face needless turmoil.”
What Comes Next
For now, markets are betting on short-term profits over long-term stability. But if Trump succeeds in reshaping the Fed with loyalists, the consequences could reach far beyond one dismissed governor. The independence of the central bank — long considered the backbone of America’s economic credibility — may be at stake.