- The Supreme Court’s Monday ruling letting Fed Governor Lisa Cook keep her job was immediately reframed by Trump and his allies as a procedural roadmap rather than a defeat: Chief Justice Roberts ruled on “narrow grounds” that Trump failed to provide Cook proper dispute procedures, and Trump told CNBC Thursday that his administration would “start the process and do perfect process and perfect procedure” to remove her — signaling a renewed attempt that could go back to the courts.
- Former Fed Chair Jerome Powell is simultaneously a target: Powell remains on the Fed’s Board of Governors until 2028 despite no longer serving as chair, and NEC Director Kevin Hassett publicly escalated criticism this week, saying on Fox Business “I’m concerned with Jay Powell staying” and warning that a “majority of people over at the Fed” may be “voting because they want to get Trump” — setting up a potential further legal confrontation given that the DOJ’s criminal probe into Powell’s handling of the Fed’s $2.5 billion headquarters renovation remains re-openable pending an IG report expected later this month.
- The Atlanta Fed presidency — vacant since Raphael Bostic stepped down in February — represents a third pressure point: Treasury Secretary Bessent is actively tapping his network for candidates, Fed Chair Warsh previously paused the search to have input on the selection, and the administration explicitly wants someone with private-sector leadership experience who will be ideologically aligned with the president; the Atlanta Fed president votes on interest rates in 2027, making the appointment consequential for the next rate cycle.
- The broader context is a Fed that is already moving in a hawkish direction Trump opposes: about half of FOMC officials now believe rates may need to rise this year due to renewed inflation pressures, and several regional bank presidents are among the most hawkish — making the administration’s push to reshape board composition and regional leadership a direct effort to shift the rate-setting balance of power before the next major inflation or recession inflection point.
What Happened?
Following the Supreme Court’s Monday ruling allowing Fed Governor Lisa Cook to remain in her post while her underlying case proceeds, President Trump and his allies are pressing forward with efforts to reshape the Federal Reserve rather than accepting the decision as a barrier. Trump announced on CNBC that his administration would restart the removal process against Cook with proper procedural steps. NEC Director Hassett escalated criticism of former Chair Jerome Powell, who remains on the Fed’s board until 2028 — an unusual move that has drawn concern from Fed watchers. Meanwhile, Treasury Secretary Bessent is actively vetting candidates for the open Atlanta Fed presidency, which became vacant in February when Raphael Bostic departed. Fed Chair Warsh had previously intervened to pause the Atlanta search so he could have input on the selection; the process has since restarted with a preference for private-sector-experienced, ideologically sympathetic candidates.
Why It Matters?
The Fed’s independence from executive branch control is one of the foundational pillars of US financial credibility with global markets. A sustained, multi-front campaign to remove sitting governors, intimidate the former chair, and install aligned candidates at regional banks represents an unprecedented peacetime stress test of that independence. Markets have so far absorbed the uncertainty — partly because Warsh has been a credible choice and partly because courts have moved to block the most aggressive steps — but the escalation after the Supreme Court ruling shows the administration is committed to a long game. The stakes are high: about half of Fed officials currently believe rates may need to rise this year, a position directly opposed to what Trump wants. If the administration succeeds in shifting the board’s composition before the next major policy decision, it could attempt to engineer rate cuts that re-ignite inflation — a scenario that would test the market’s confidence in the dollar and US Treasuries.
What’s Next?
The IG report on the Fed’s headquarters renovation — expected later this month — is the most immediate wildcard: the DOJ’s criminal probe was paused but not closed, and US Attorney Pirro said she would scrutinize the IG’s findings, leaving open the possibility of reopening the investigation as leverage against Powell. Any renewed attempt to fire Cook will face the same legal challenges that brought the case to the Supreme Court, but Trump’s advisors believe Roberts’s narrow ruling gives them a procedural path. The Atlanta Fed selection is the administration’s cleanest opportunity: regional bank presidents are chosen by local boards with final approval from the Washington Fed board, and Warsh’s involvement in the process gives the administration more influence than it has over presidentially-appointed governors. Watch mid-July for both the IG report and any announcement on Atlanta Fed candidates as the clearest signals of how aggressively the administration is pursuing its Fed strategy.
Source: Bloomberg
