President Donald Trump's effort to remove Federal Reserve Governor Lisa Cook appears aimed at pressuring the Fed to lower interest rates. Historical examples from Turkey and Argentina show that sacking central bank officials can undermine credibility, trigger currency collapses, and lead to rising inflation. Markets have stayed relatively calm so far because of the resilience of the US financial system, but political interference increases the risk of future rate volatility and price instability. Recent US indicators show slowing growth, tariff-driven inflationary pressure, and a stagnating job market, while Fed Chair Jerome Powell signalled a possible September rate cut to support the economy.
President Donald Trump wants to remove Federal Reserve Gov. Lisa Cook - and if he succeeds, it could mean bad news for your wallet. While Trump's closer-term aim is likelyto pressure the Fed to lower interest rates, international historical precedent shows that the longer-term result of a president sacking central bank officials could be both higher rates and higher inflation.
In Turkey, for instance, President Tayyip Erdogan fired Naci Agbal, the country's central bank chief, in 2021. Reuters reported that a hefty interest hike was "the last straw" for Erdogan. In the wake of the firing, the value of Turkey's lira tumbled, and inflation spiked. In 2010, a similar showdown occurred in Argentina, when President Cristina Fernández de Kirchner attempted to fire central bank president Martín Redrado over his refusal to release reserve funds to pay down international debt.
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