– This is the script of CNBC’s financial news report for China’s CCTV on August 27, 2025.
This incident marks the first time since the Federal Reserve was established in 1913 that a U.S. president has attempted to remove a Fed governor from office. Many Wall Street economists and analysts expect that Trump’s effort to oust Cook may ultimately end up before the Supreme Court, potentially triggering a legal battle over presidential authority and the Fed’s independence.
Analysts note that under the Federal Reserve Act, the U.S. president does have the authority to remove a Fed governor “for cause.” But the key issue is that the law does not clearly define what constitutes “cause,” leaving the interpretation ambiguous. JPMorgan economist Michael Feroli also pointed out that “for cause” removals are typically understood to apply only to conduct during the official’s term. In Cook’s case, the alleged mortgage fraud predates her service as a Fed governor. However, because there is little judicial precedent on this matter, the outcome will ultimately depend on the court’s ruling.
If Cook is indeed removed, the Fed’s Board of Governors would have two of its seven regular seats vacant. That would give the Trump administration a majority on the board. In an interview overnight, Trump once again emphasized his expectation that interest rates would soon decline.
Donald Trump
President of the United States
“Once we have a majority, housing is going to swing, and it’s going to be great. People are paying too high an interest rate. That’s the only problem with housing. We have to get the rates down a little bit.”
But analysts told CNBC that Trump’s pressure on the Fed to cut rates may backfire. The key point to understand is that the Fed sets the federal funds rate — the overnight, short-term rate. What actually drives U.S. mortgage rates is the longer-term Treasury yield.
While lower short-term rates could give the economy a boost, markets widely expect that over a longer horizon, this stimulus would increase inflationary pressure, which in turn could push long-term rates higher.
Rebecca Patterson
Former Bridgewater Chief Strategist
“I wish someone would sit down with the President and the administration and say, Look, if you want housing to fly, doing this is going to push the long end yield higher, which is how mortgage rates are set. So that hurts the housing market, which hurts construction. It hurts all those related jobs as well as homeowners.”
Because so much uncertainty still surrounds this case, market reaction overnight remained relatively muted. Still, some signs have emerged. On Tuesday, the U.S. dollar weakened as investors bet that the Fed faces growing pressure to cut rates.
Overnight, the U.S. dollar index — which measures the dollar against six major currencies — slipped about 0.2% to 0.3%.
Meanwhile, the U.S. Treasury yield curve steepened. Short-term yields fell, while longer-term yields rose. The 2-year Treasury yield dropped more than 4 basis points, while the 30-year yield climbed over 2 basis points. Bond prices and yields move in opposite directions.
Finally, history offers a cautionary tale. More than 50 years ago, then-President Richard Nixon, seeking re-election, pressured the Fed to ease monetary policy ahead of the election. The result was a sharp dollar depreciation, a stock market collapse, and a surge in bond yields. Nomura told CNBC that today’s situation bears similarities, warning that if the Fed’s independence is undermined, the dollar will likely remain under downward pressure.
