Lisa Cook, the first black woman represented on the Federal Reserve Board, was publicly “fired” in a public tweet posted by President Donald Trump last month after allegations were made by one of his supporters, Bill Pulte, who claimed that she’d committed mortgage fraud in 2021, before being employed on the board. The properties involved in this case include residences in Michigan and Georgia in which Cook took out loans, with Pulte claiming that she named both properties as her primary residence for better loan deals. The documents Pulte used to support his claim were found in standardized federal mortgage paperwork that stipulated both properties she was taking out the loans for were meant as a primary residence, though documentation filed with a Georgian Fulton County court shed light on a stipulation of “‘unless Lender otherwise agrees in writing,’” with a loan estimate document prepared by her credit union stating “‘Property Use: Vacation Home,’” that corroborated Cook’s claims that while one property was a primary residence, the other was to be used as a vacation home.
As a result of limited evidence of Pulte’s claims and seeing it as a violation of the Federal Reserve Act separating politics and the central bank, a federal appeals court has temporarily disabled Trump from removing Cook from her position. Trump’s attempted firing has led to discussion about his intentions of firing Cook — especially now that he has insisted on bringing the case before the Supreme Court, notwithstanding the scarce proof. Some speculations have been made that he may be trying to open another spot on the board to appoint a new member sympathetic to his values following his recent appointment of Stephen Miran, who was inducted through a 48-47 Senate vote, after board member Adriana Kugler unexpectedly stepped down from her position before the termination of her term in January 2026. With Miran’s addition to the board, if Trump were to replace the Biden-appointed Cook with someone who may be favorable to his policies, he would reach a majority with four members on the seven-member board that could potentially fulfill his large campaign promise to lower interest rates.
With Cook remaining in her position as of now, she was permitted to remain in a vote held by the rate-setting committee on September 16 and 17 that ultimately resulted in a quarter-point cut with a favorable vote of 11-1 due to concerns with the labor market — the only dissenter being Miran, who insisted on an even more significant half-point cut. Trump would respond to this decision by putting additional pressure on committee chairman, Jerome Powell, due to not making this cut sooner. These rate cuts were expected and rationalized due to issues with the labor market, particularly in the recent weak creation of new jobs after the 258,000 jobs eliminated in May and June of this year. With July yielding only 73,000 jobs and August with an even more staggering low of 22,000 jobs, the committee reasoned that these lower rates would be more effective in fighting unemployment than hurting inflation.
That being said, how exactly do interest rates affect both of these factors? Inflation can be affected by a change in interest rates due to how they impact the purchasing power of consumers. When rates are higher, consumers naturally have less purchasing power due to not being able to buy as many goods when they need to be able to pay off interest for things like loans and credit cards. This results in prices going down due to receding demand and slowing inflation as a result. On the other hand, lower interest rates do the opposite — giving consumers more purchasing power due to having less interest to pay and raising demand that causes prices to also follow an upward trend, contributing to inflation. The dynamic between interest rates and unemployment is largely impacted by how inflation is either hindered or promoted, with higher rates discouraging hiring from firms to save money when prices are higher, and the opposite case when prices fall. As Cook’s case is brought to the Supreme Court, the future of the voting dynamics within the rate-setting committee could affect decisions moving forward.
