Will Trump control Fed? His vision for US central bank could become reality by February next year

Trump Fed rate cut plan: US president Donald Trump’s move to fire Federal Reserve Governor Lisa Cook is setting off a tense and potentially historic showdown over who controls the nation's central bank and what direction US economic policy takes next.

Donald Trump Accuses Lisa Cook of Misconduct

In a letter posted on Trump's social media site Truth Social on Monday, Trump accused Cook of making false statements on mortgage applications in 2022 and claiming two separate homes as her primary residence, as per Yahoo Finance. He said those allegations gave him "sufficient cause" to remove her from the Board of Governors, according to the report.

Lisa Cook Refuses to Step Down

But Cook isn’t going to back down as she highlighted that she will fight Trump’s attempt to fire her, saying that “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so. I will not resign,” as quoted by Yahoo Finance.


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One Seat, Big Consequences: What’s at Stake for the Fed Board

However, the stakes go far beyond one seat on the Federal Reserve’s Board of Governors. If Trump succeeds in removing Cook and replacing her with his own pick, he could gain a majority on the seven-member board, giving him greater influence over interest rate decisions and other key policies, according to the report.

It’s part of a broader effort by the president to reshape the Fed in his image, favoring immediate and aggressive rate cuts to stimulate the economy, as per Yahoo Finance. Trump already has two allies in the Fed board, Michelle Bowman and Christopher Waller, both appointed during his first term, according to the Yahoo Finance report. His latest nominee, Stephen Miran, currently serving as Chair of the White House Council of Economic Advisers, is expected to temporarily fill an open seat through January, as per the report.

If Cook is ousted and replaced by another Trump-aligned board member, Trump would have four allies, which is a majority of the seven-member board, that could begin shifting the Fed’s policy in a new direction that would be in line with his vision of immediately lowering interest rates and holding potential leverage over regional presidents, as reported by Yahoo Finance.

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Donald Trump’s Push to Reshape the Fed With Loyal Allies

The timing of this fight also matters because in February 2026, the five-year terms of all 12 regional Federal Reserve Bank presidents are set to expire and they need to be renewed for the officials to stay in their seats, according to the report. While they are independently selected, but they are subject to final approval by the rapidly chaning Board of Governors in Washington, as reported by Yahoo Finance.

Jon Hilsenrath, StoneX Senior Advisor, explained that, “This is high drama and there’s a lot at stake for the Fed,” adding that if the US president gets a majority of allied governors, “then all of a sudden the president has remade the Fed in his image,” as quoted in the Yahoo Finance report.

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How Fed Decides Interest Rate

For Trump this is crucial because Federal Reserve presidents are influential as they sit atop their regional banks and set policy there and they also cast votes at the Federal Open Market Committee (FOMC) meetings in Washington, where interest rate levels are decided, according to the report.

So that means, totally, 12 voting members get to decide the path of interest rates every six weeks, which includes seven Board of Governors and the president of the Federal Reserve Bank of New York, who have permanent voting seats, and then, four of the remaining eleven regional presidents have votes on a rotating basis, as reported by Yahoo Finance.

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Can Trump Influence the Direction of Rate Cuts?

Capital Economics' latest analysis highlighted that "remains unlikely that Trump will be able to capture a majority of the 12-person FOMC voting committee during his term," pointing out that even Trump allies "are not suddenly going to vote down every existing Reserve Bank president" but that it would notably tilt the conversation in the direction of rate cuts, as quoted in the report.

The analysis also warned that, "Aside from interest rates, a Trump-leaning Board of Governors means the administration would also have greater influence over bank supervision," as quoted by Yahoo Finance.

FAQs

Why is President Trump trying to fire Lisa Cook?
He claims she made false statements on mortgage applications and listed two primary residences in 2022.

Who are Trump’s allies on the Fed board?
Michelle Bowman and Christopher Waller, both appointed during his first term.