Trump’s Firing of Fed Governor Sparks Market Uncertainty

On August 26, 2025, U.S. stock futures dipped after President Donald Trump fired Federal Reserve Governor Lisa Cook, accusing her of submitting fraudulent mortgage applications. “I have determined that there is sufficient cause to remove you from your position,” Trump wrote in a letter posted on social media. Cook refuted the claim, asserting Trump lacks the authority to dismiss her and vowing not to resign. This marks the first time a U.S. president has attempted to fire a Fed board member since the institution’s founding in 1913, raising questions about the legality of the move and its implications for monetary policy. Michael Feroli, chief U.S. economist at JP Morgan, noted, “If the president were successful, the outcome would be momentous,” highlighting the potential for significant shifts in Fed governance. At 6:15 a.m. ET, Dow futures fell 0.14%, S&P 500 futures slipped 0.08%, and Nasdaq futures lost 0.06%, reflecting investor unease.

Trump’s action opens another vacancy on the Fed’s seven-member board, following the resignation of Biden appointee Adriana Kugler. With Trump recently nominating Stephen Miran to fill Kugler’s seat and his appointees Christopher Waller and Michelle Bowman already on the board, a successful removal of Cook could give Trump’s picks a majority. “Perhaps the more relevant outcome of a successful removal of Cook is that other governors could potentially be exposed to removal as well,” Feroli said. “This would add to upside inflation risks.” Such a shift could embolden Trump to influence monetary policy, particularly as he has repeatedly called for lower interest rates. With Fed Chair Jerome Powell’s term expiring in May 2026, Trump’s ongoing attacks on Powell and his floating of replacement candidates signal a broader push to reshape the Fed, potentially unsettling markets further.

Amid the Fed turmoil, markets are also digesting corporate news. Interactive Brokers will join the S&P 500 index before trading opens on August 28, a move that could bolster its visibility among investors. In the cryptocurrency space, French chipmaker Sequans announced plans to build a Bitcoin treasury, filing for a $200 million equity offering to accumulate 100,000 Bitcoin by 2030. These developments, while significant, are overshadowed by the uncertainty surrounding the Fed’s independence. Investors are bracing for potential legal challenges from Cook and monitoring upcoming economic data, such as inflation reports, to gauge the broader impact of Trump’s actions on monetary policy and market stability.