The Federal Reserve lowered its key interest rate by a quarter-point, projecting two more cuts this year due to concerns about the labor market’s health. This move, the first since December, reflects a shift from focusing on inflation to employment, as hiring slows. While the Fed aims to boost growth and hiring, the decision faced dissent from a newly appointed policymaker favoring a larger cut. Despite some internal differences, officials still anticipate further rate reductions, although less than Wall Street had anticipated. The Fed faces the challenges of a weakening economy and external pressures on its independence, particularly regarding the attempt to remove a Fed governor.
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President Donald Trump is seeking unprecedented power over U.S. fiscal and monetary policy through several cases before the Supreme Court. One case concerns Trump’s tariffs, which he claims are valid without Congressional approval, potentially raising trillions in new taxes. Another case involves Trump’s ability to impound funds, essentially refusing to spend money appropriated by Congress. Finally, Trump is attempting to gain the power to fire a member of the Federal Reserve’s Board of Governors. If Trump is successful in these cases, he could gain dictatorial control over the U.S. economy.
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In a recent ruling, a judge has blocked a former president from removing Federal Reserve Governor Lisa Cook. The judge’s preliminary injunction cited that the removal attempt violated the Federal Reserve Act’s “for cause” provision, which limits grounds for removal to actions related to the Governor’s behavior in office. This decision allows Cook to participate in upcoming Fed meetings. The former president’s effort to remove Cook followed months of pressuring the Fed to lower interest rates, and stemmed from allegations of mortgage fraud that occurred before Cook joined the Fed.
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Following President Trump’s announcement of Federal Reserve Governor Lisa Cook’s removal, Cook stated she would not resign, disputing the “for cause” reasoning cited in the termination. Trump’s claims of mortgage-related misconduct, originating from a criminal referral by Federal Housing Finance Agency Director Bill Pulte, have been denied by Cook, who was appointed by President Biden. The unprecedented move has sparked debate about presidential authority to remove a Fed governor, raising concerns about the Fed’s political independence and signaling a potential court challenge. Legal experts suggest this could potentially reach the Supreme Court, with implications for monetary policy and markets.
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In an unprecedented move, former President Donald Trump announced the firing of Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud as the cause. This action marks the first time a president has fired a central bank governor in the Fed’s history, raising questions about the legality and implications of such a decision. The dismissal has sparked concern over the Fed’s independence, as Trump has previously criticized the central bank’s interest rate decisions, potentially aiming to exert political influence over monetary policy. The firing’s legality is uncertain, as the law only allows removal “for cause”, a term whose boundaries are undefined, but the move has already impacted the US dollar index, which dropped in value following the announcement.
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Russia’s economy is teetering on the brink of recession, according to Economy Minister Maxim Reshetnikov, due to weak business sentiment and indicators. He urged the central bank to ease its monetary policy, despite a recent interest rate reduction to 20 percent following a peak of 21 percent. Persistent inflation, exceeding 8 percent annually, is fueled by war spending and labor shortages, hindering sustainable economic growth. This economic fragility comes amidst ongoing conflict in Ukraine, including recent drone attacks and concerns over the Zaporizhzhia nuclear power plant.
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US private payrolls saw their smallest increase in over two years during May, adding only 37,000 jobs. This is significantly lower than the 110,000 jobs economists predicted and represents a considerable drop from the revised 60,000 jobs added in April. This sluggish growth signifies a worrying trend, especially considering the previous months’ figures and the general economic climate.
The weak job growth is particularly concerning given the context of broader economic uncertainty. Many believe this slow pace is not a true reflection of the overall labor market’s health but rather a symptom of deeper underlying issues. The economic headwinds are likely exacerbating pre-existing challenges within the job market, leading to this subdued growth.… Continue reading
In a White House meeting, Federal Reserve Chair Jerome Powell rebuffed President Trump’s pressure to lower interest rates, reiterating his commitment to objective, non-political decision-making based on economic data. Powell emphasized that the Fed’s policy will be determined by incoming economic information and its implications for the economic outlook. Trump, however, argued that the Fed’s current interest rate stance disadvantages the U.S. economically relative to other nations, particularly China. This meeting follows Trump’s previous attempts to influence the Fed’s monetary policy, including threats to remove Powell, a move deemed legally impossible by the Supreme Court.
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Elon Musk’s Department of Government Efficiency (DOGE) is auditing federal agencies, including a focus on the Federal Reserve, which Musk has long criticized for its monetary policies and alleged overstaffing. Musk asserts that all government entities, especially the Fed, must be transparent and accountable. This audit follows Musk’s previous public statements calling for lower interest rates and questioning the Fed’s employee count, a claim Fed Chair Jerome Powell refuted. A federal judge recently blocked DOGE’s access to Treasury records following a lawsuit.
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President Trump publicly urged immediate interest rate reductions globally, marking a renewed confrontation with the Federal Reserve. His comments, delivered at the World Economic Forum, followed his past criticisms of Fed Chair Jerome Powell and his assertion of influence over monetary policy. While the stock market reacted positively, the Fed has consistently maintained its independence from political pressure. Trump intends to communicate directly with Powell, despite lacking direct statutory control over the central bank.
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John Q. Hosedrinker 
Matt Underwood