Trump races to reshape Fed days before interest rate decision

(WASHINGTON) — Twelve policymakers at the Federal Reserve are set to take a high-stakes vote this week on the nation’s benchmark interest rate, attempting to steer the economy through a stormy bout of slow hiring and rising inflation.

In a highly unusual circumstance, however, two of the policymakers stand in limbo – uncertain if they will vote at all – with little more than 48 hours before the announcement.

In recent weeks, President Donald Trump has moved to fire one member of the Fed’s board of governors and secure Senate confirmation for another. The race to reshape the Fed comes after Trump railed for months against the central bank and its Chair Jerome Powell for declining to heed his call for lower interest rates.

The clash over the composition of the Fed board casts uncertainty over the Fed’s meeting on Wednesday, where officials are expected to announce the central bank’s first rate cut since December.

In a social media post on Monday, Trump reiterated his criticism of Powell, saying the Fed chair “MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND.”

Trump recently moved to fire board member Lisa Cook, who sued Trump over her attempted ouster, saying the decision violated her legal protections as an employee at the independent federal agency. Trump said he removed Cook over mortgage fraud allegations against her.

Federal law allows the president to remove a member of the Fed board “for cause,” though no president has attempted such a removal in the 112-year history of the central bank.

Last week, a federal judge issued a preliminary injunction requiring the Fed to let Cook continue serving in her role as a governor of the Federal Reserve System as her lawsuit moves through the courts.

Days later, the Trump administration filed a request with an appeals court asking to remove Cook by Monday, before the scheduled vote on interest rates. In a court filing over the weekend, Cook asked the appeals court to reject Trump’s bid.

Last month, Trump called on Cook to resign on the same day that Bill Pulte, the director of the Federal Housing Finance Agency, posted on X part of an Aug. 15 letter sent to U.S. Attorney General Pam Bondi accusing Cook of falsifying bank documents and property records to acquire more favorable loan terms, “potentially committing mortgage fraud,” the letter stated.

In a statement provided to ABC News at the time, Cook said she learned from the media about Pulte’s letter seeking a criminal referral over the mortgage application, which predated her time with the Federal Reserve.

“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” Cook said in the statement last week. “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

Meanwhile, Trump has sought Senate confirmation for Fed board-nominee Stephen Miran, a top economic advisor at the White House. The Senate is expected to vote on Miran’s nomination on Monday night.

Miran has vowed to safeguard central bank independence but said earlier this month that he does not plan to resign from his position within the Trump administration. Miran has been nominated for a vacancy created by the early retirement of Fed board member Adrianna Kugler, whose term was set to end in January.

If confirmed, Miran said he plans to take an unpaid leave of absence from his current role. Miran reached the decision after “advice from counsel,” since his term on the Fed board would last four months, Miran said at a Senate hearing this month.

Five meetings and nine months have elapsed since the Fed last adjusted interest rates. The federal funds rate stands between 4.25% and 4.5%, preserving much of a sharp increase imposed in response to a pandemic-era bout of inflation.

That posture is expected to shift, however. Powell recently hinted at the possibility of an interest rate cut, appearing to indicate greater concern for flagging employment growth than for rising prices.

Investors peg the chances of a quarter-point rate cut this week at 96%, according to the CME FedWatch Tool, a measure of market sentiment.