Stock Market Dismisses Trump's Attempted Dismissal of Fed Governor Lisa Cook: Market Unphased by Controversy

In a historic move, President Donald Trump attempted to fire Federal Reserve Governor Lisa Cook, marking the first such removal in the 112-year history of the central bank. However, Cook sued Trump to prevent her removal, and she remains in her position after legal battles over the Fed's independence.

The clash between Trump and the Fed has stoked concern among many economists about the independence of the central bank. The legal fight regarding Cook's removal remains unclear, and it's not yet certain who will replace her at her original appointment site.

The attempted ouster came after Trump railed for months against the Fed and its Chair Jerome Powell for declining to heed his call for lower interest rates. The stock market has climbed on three consecutive days since Trump attempted to fire Cook, with the S&P 500 closing at a record high on Thursday.

The resilience of the stock market owes to overlapping factors, including doubts about whether courts will ultimately grant Cook's removal, hope for lower interest rates if Cook were to be ousted, and the sheer momentum of a monthslong market surge. Stock investors may view the possibility of greater Trump influence over the Fed as a recipe for interest rate cuts, which tend to move stocks higher.

If Trump replaces both Cook and Stephen Miran, who replaced Adriana Kugler this month, interest rate policy may change less than some economists fear due to a majority made up of appointees from Trump's first term or other presidents. The Federal Open Market Committee (FOMC), responsible for setting interest rates, is made up of the seven members of the Fed board and a rotating set of five Federal Reserve bank presidents.

Trump needs to seek Senate confirmation for his two appointees to replace Cook and Miran. The appointment of Cook would give Trump appointees from both his first and second term a majority of the seven-member Fed board. In February, the members of the Fed board will oversee the appointment of presidents of the Federal Reserve banks, potentially allowing a potential Trump-appointed majority on the board to aim to install allies.

The Department of Justice drops charges against another client of AG Pam Bondi's brother Brad. Jay Ritter, a professor of finance at the University of Florida, states that it's not clear if Trump's attempt to fire Cook will have a big effect on Fed policy.

A hearing for Friday morning has been granted for Cook's lawsuit against Trump. Trump says he removed Cook over mortgage fraud allegations against her, but the details of these allegations have not been made public.

An appeals court rules that Trump's global tariffs are unlawful, adding another layer of complexity to the ongoing power struggle between the president and the Fed. The Fed's independence and the outcome of the legal battle surrounding Cook's removal will have significant implications for monetary policy and the US economy.

Stock Market Dismisses Trump's Attempted Dismissal of Fed Governor Lisa Cook: Market Unphased by Controversy