The fate of Lisa Cook, who is fighting attempts by President Donald Trump to remove her from the Federal Reserve’s Board of Governors, has huge implications for a keystone of good economic policy: central bank independence.

At the heart of her firing attempt – and other moves to undermine the Fed by the Trump administration – is a power struggle. Central banks, which are public institutions that manage a country’s currency and its monetary policy, have an extraordinary amount of power. By controlling the flow of money and credit in a country, they can affect economic growth, inflation, employment and financial stability.

These are powers that many politicians would like to control or at least manipulate. That’s because monetary policy can provide governments with economic boosts at key times, such as around elections or during periods of falling popularity.

The problem is that short-lived, politically motivated moves may be detrimental to the long-term economic well-being of a nation. They may, in other words, saddle the economy with problems further down the line.

That is why central banks across the globe tend to receive significant leeway to set interest rates independently and free from the electoral wishes of politicians.

In fact, monetary policymaking that is data-driven and technocratic, rather than politically motivated, has since the early 1990s been seen as the gold standard of governance of national finances and has largely achieved its main purpose of keeping inflation relatively low and stable.

But despite independence being seen to work, central banks over the past decade have come under increased pressure from politicians.

Trump is one recent example. In his first term as president, he criticized his own choice to head the U.S. Federal Reserve and demanded lower interest rates.

Attacks on the Fed have accelerated in Trump’s second administration. In April 2025, Trump lashed out at Fed Chair Jerome Powell in an online post accusing him of being “TOO LATE AND WRONG” on interest rate cuts, while suggesting that the central banker’s “termination cannot come fast enough!” Unable to force Powell out, Trump has now brought the power struggle to a head with his firing of Cook, nominally over allegations that the Fed........

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