Washington D.C. just witnessed a political plot twist worthy of a Netflix series 😲. President Donald Trump tried to fire Federal Reserve Governor Lisa Cook over alleged mortgage fraud. But thanks to her legal protections, Cook isn't backing down.
Why it matters: The Federal Reserve's power comes from its independence. Fed governors have 14-year terms and can only be removed "for cause." In theory, this shield keeps politics out of key money decisions. Trump's move, critics say, blurs that line.
Global investors watch the Fed like hawks 🦅, trusting its leaders to set rates based on data, not political spins. When Washington throws punches at the Fed, markets get jittery. Stocks, bonds and exchange rates have already shown signs of stress.
Imagine planning a trip and suddenly your trusted GPS glitches. That's how traders feel when the Fed's roadmap seems tampered with. If rate hikes start looking like presidential favors, the whole monetary system could lose its North Star.
Impact on the dollar: The U.S. dollar reigns partly because central banks worldwide believe in the Fed's nonpartisan game plan. Now, some countries might think, "Why not diversify?" 🌐 Euro, yuan or digital currencies could gain new fans.
In short, Trump's clash with the Fed isn't just Washington drama. It's a potential shake-up for dollar dominance and global financial stability. Buckle up, because these ripples could turn into waves 🌊.
Reference(s):
Trump's assault on the Fed: A blow to dollar credibility and stability
cgtn.com
