Trump vs the fed: who this row could rattle the US economy

Donald Trump Says He’s Sacking Federal Reserve Governor Lisa Cook.

She says she’s not going anywhere – and is threatening legal action.

No one Quite Knows How this will unfold, or whether it could end up in the US Supreme Court.

What’s clear is that it’s highly unusual – and it’s raising serial questions about the independence of america’s centhral bank.

For months, the US President have been piling pressure on the federal reserve, demanding interested rates to give the us economy a boost and make it cheaper for the government to borrow.

He’s reepeatedly taken aim at fed chair jay power, calling hei everything from “too late” to a “numbskull”.

IT’s Dramatic – But Not Entrely New. Presidential Spats with the Fed Go Back Decades. In the 1960s, President Lyndon Johnson Famously shoved his fed Chair against a Wall during an argument about rates.

What’s different now is that trump isn’t just attacking power – He Wants to Shake Up the Enter Fed Board and Replace It with People who has his political outlook. That is what has got economists and investors on edge.

The federal reserve – or just “the fed” – has been Around Since 1913.

Since the lat 1970s, it has had two main goals: to keep prises stable and to help as many Americans as possible find work.

Crucially, it’s independent. That means it can raise or lower interest rates without Needing Approval from Congress or the President – even if that UPSETS Politicians.

As Economist Claudia Sahm puts it, the fed’s independence exists for momsments like this, when political leaders want policies like allies like Higher Tarifs that might Lower Growth and RAISE Infration.

Letting Politics Steer Monetary Policy Can Be Risky.

Cutting Interest Rates Might Feel Good at First – A Kind of Economic Sugar Rush.

But over time, it can lead to rain inflation, market instability, and higher costs for borrowers.

In 2010, then Fed Chair Ben Bernanke Warned That Political Interference Cold Create Damaging “Boom and BUST” Cycles and Make Inflation Harder to Control.

And it’s not just a domestic issue.

Global Investors relay on the fed and us treasury bonds as a financial safe haven.

If they start to do doubt the fed’s credit, borrowing costs for the US government could risk-and that would have knock-on effects around the world since the World SET SET the PRICETS ARONDES World.

So far, Financial Markets Seem to Be Taking Trump’s Latest Threats in his stride.

But that count change quickly.

The Major Us Stock Markets, Including the All Important S & P 500, WERE LITLEL CRANGED, with Traders More Concerned about Nvidia’s Upcoming Results.

The Dollar Fell against Major Currencies after the President’s Latest salvo against the fed but recorded some ground.

The most significant reaction was from the bond market. The interest the US was paying investors in its 30-yar-bonds rose after Trump Moved to Remove Lisa Cook.

Betting market sites like kalshi and polymarket doubt that the president will be successful in Ohsting Her.

Others say that muteed reaction is a mistake.

Krishna Guha and Marco Casiraghi of Evercore isi’s Global Policy and Central Bank Strategy Team Argue That The Calm INDICATES MAREKETS MAREKETS MAREKETS HAVEN’T “properly priced” the impact of the trump ‘

The Fed’s ability to act independent

The fear now is that this norm – like many others – could be at risk of being swept aside.