Trump’s Pressure Campaign on the Fed Casts Shadow Over Jackson Hole Gathering
President’s attempts to control monetary policy became dominant—but unspoken—theme at annual central bankers’ retreat
JACKSON HOLE, Wyo.—Central bankers debated artificial intelligence, demographics and interest rates during their annual conference here this weekend. But institutional survival became the unmistakable and pervasive undercurrent at what is normally a staid academic gathering.
On Friday, the first full day of the conference, President Trump escalated a brazen and relentless campaign to remake the Federal Reserve, when he said he was considering firing governor Lisa Cook over mortgage-fraud allegations made by a Trump administration housing official.
For months, Trump and his confidants have been lambasting Fed Chair Jerome Powell for not lowering rates at the speed they would like to see, calling him either incompetent or politically motivated—or both.
The attacks all fit within a broader effort by Trump and his allies to make life so uncomfortable for Fed officials—first Powell, and now Cook—that they cave or quit, clearing the way to get the lower rates Trump craves or to install more loyalists who will deliver.
“This should be seen for what it is: a blatant shakedown and an attempt to strong-arm policymakers into lowering rates,” said Tim Mahedy, a former senior adviser at the San Francisco Fed who runs an economic consulting firm in San Diego.
The campaign against Cook, who is the first Black woman to serve on the Fed’s board, took an ugly turn on Friday night. An image posted on the president’s social-media account included the portraits of the Fed’s board of governors and Stephen Miran, Trump’s pick for an empty seat on the board. In the center was a larger photo purporting to be Cook. It displayed a red X over the photo and labeled Cook as “The Fraudster.” A post on Saturday included a photo labeled as Cook’s Michigan home.
The threats have Fed officials walking a careful line between defending their institution and avoiding direct political confrontation. Outside the rustic lodge overlooking the Grand Tetons, a stepped-up law-enforcement presence served as a visible reminder of how a once sedate academic seminar had become a high-security event.
At Jackson Hole, answers to questions about their independence were wrapped in extremely diplomatic language. “At the end of the day, I have to look at myself in the mirror every day and do what I know is right,” Boston Fed President Susan Collins said when asked about the president’s statements about Cook.
Kansas City Fed President Jeffrey Schmid told CNBC that “great steel is tested by fire” when asked about Fed independence.
The White House has said that its goal is to turbocharge the economy, and that monetary policy should complement the president’s agenda. Administration officials have said the Fed is overly preoccupied about the risks of inflation from tariffs and should cut rates to boost home sales.
Some Fed policymakers are uneasy about steps that could spur growth at a time when businesses are figuring out whether they can raise prices to avoid a cost squeeze from tariffs.
In a widely anticipated speech Friday, Powell signaled officials are prepared to cut rates at their next meeting because the economic outlook is shifting. Powell has consistently said the Fed’s decisions are based solely on its best economic judgments, but the alignment with Trump’s wishes risks damaging perceptions of Fed independence.
Cook has said she won’t be “bullied” into resigning her seat “because of some questions raised in a tweet.” She has said she would provide more information about two mortgage transactions that a Trump administration official has questioned. At the Jackson Hole conference, she declined to comment further.
The White House hasn’t said what motivated its focus on Cook. Any effort to remove her could be tied up for months in litigation. Fed governors can be dismissed for cause, but it isn’t clear what conduct rises to meet that standard.
The Trump administration’s allegations have placed Cook in a precarious spot. “I think it’s incumbent on Governor Cook to explain what happened,” said Michael Strain, an economist at the American Enterprise Institute. “At this point there’s a lot we don’t know about what happened.”
The effort to oust Cook came less than two weeks after Trump selected his economic adviser Miran to fill the spot of another Fed governor. That seat opened when Adriana Kugler unexpectedly stepped down on Aug. 8. She didn’t give a reason for resigning.
Mahedy said the Cook case showed how the Miran nomination had done little to satisfy the White House’s zeal for Fed control. The Trump administration operates under “schoolyard rules,” he said, where “you give up your lunch money, and they come back for your backpack.”
Former Fed officials say they are less worried about high-profile efforts to pressure Powell because people who know Powell best don’t think those will work. Instead, they are more worried about how Trump and a new chair could methodically dismantle the rhythms and norms of the institution that has tried to stay far outside of the glare of partisan politics. Powell’s term as chair expires in May.
“We’ve seen what’s happened to the staff at the Justice Department, at the FBI,” said Jon Faust, a former senior adviser to Powell. “The next chair could attempt to start the same sort of purge of the board staff as well.”
Right now, Trump has two appointees on the Fed’s seven-person board of governors. With two more nominees, including a new chair next spring, they could gain a majority that could choose to fundamentally remake the entire Fed system.
One way to weaken Fed structure could be to undermine the system’s 12 regional banks.
While the seven Fed governors are nominated by the president and confirmed by the Senate, the 12 reserve bank presidents are chosen by local boards composed of bankers and business leaders from their respective districts. Both groups vote on interest-rate policy, but governors serve in Washington while regional presidents operate from cities like New York, Chicago and San Francisco.
The Fed presidents serve five-year terms, and the terms run concurrently. The 12 presidents must be reappointed by the governors to new terms before next March.
If Trump has a majority on the board of governors before next March, they could decline to reappoint regional Fed presidents. Dismissing presidents who have served ably would shatter decades of precedent and pierce a key firewall protecting the Fed’s independence that dates to the central bank’s founding in 1913.
Two Trump-appointed governors, Christopher Waller and Michelle Bowman, abstained from voting to approve the appointment of Austan Goolsbee, a former economic adviser to President Barack Obama, as president of the Chicago Fed in late 2022. Goolsbee took office in January 2023.
Fed officials are haunted by the memory of political pressure that contributed to a series of policy errors in the 1970s. The high inflation that followed required punishing recessions caused by very high interest rates in the early 1980s.
Financial markets have historically rewarded central bank independence with lower borrowing costs and more stable currency values—benefits that could erode if investors lose confidence in the Fed’s ability to make decisions based on economic data rather than political pressure.
