Trump moves to fire Federal Reserve Governor Lisa Cook effective immediately

Fed Independence & Political Influence - The potential firing of Fed Governor Lisa Cook by President Trump raises concerns about the legality of the move, the independence of the Fed, and the outlook for monetary policy [1] - The market may not react negatively to a perceived lack of Fed independence, prioritizing immediate easy monetary policy over long-term inflation concerns [24] - The Federal Reserve is potentially becoming permanently politically marked, similar to the Supreme Court, influencing how it's perceived and judged [30] Monetary Policy Outlook - Market probabilities initially showed an 82% probability of a rate cut in September, with a slight increase from 34% to 42% for a second cut in October following the news [5] - The market was already pricing in a dovish Fed, with the December 2026 Fed funds contract at 3% [20] - A Trump-controlled Fed board could potentially eliminate the 12 district presidents, effectively giving the president full control of monetary policy [6] Potential Market Reactions - Key indicators to watch for market concern about Fed independence are the dollar, the bond market, and then the stock market [25] - The strength of the American economy and the liquidity of US dollars globally might make the market immune to concerns about Fed independence [26] Board Composition - Replacing Cook would potentially give Trump a majority on the Fed board [5] - Current board members have varying degrees of perceived independence, with some seen as more likely to align with the president's views [18][19]