How Trump Could Gain Further Control of Fed in Coming Months

President Donald Trump could have as many as five appointees on the Federal Reserve Board of Governors next year. (Mandel Ngan / AFP / Getty Images)

President Donald Trump could have the opportunity to reshape the Federal Reserve in his image though board appointments in Washington, D.C. A bigger question is whether his reach could extend even further.

Trump said on Tuesday that he would soon have a majority of his nominees on the Federal Reserve Board of Governors, who will work to slash interest rates. “We’ll have a majority very shortly,” Trump said during a televised cabinet meeting. “So that’ll be great.” His comments came following his move late Monday to fire Federal Reserve Gov. Lisa Cook. That decision will test the limits of presidential power and possibly ignite a constitutional clash over the Fed’s independence.

Trump’s attempt to fire Cook is based on allegations that she made false statements on mortgage applications. That move, combined with Gov. Adriana Kugler’s resignation earlier this month and the expiration of Powell’s term as chair next May, would give Trump the opportunity to fill three seats on the seven-member board. Together with governors Michelle Bowman and Christopher Waller, both Trump appointees who dissented in favor of rate cuts in July, they would form a five-member majority on the seven-person board. Since 2022, Waller has also been overseeing the process at the Fed to appoint new presidents as vacancies arise.

That majority matters, and not only in determining the federal-funds rate. Governors have the authority to approve or veto the reappointment of all 12 regional Fed presidents, who are next up for renewal in February 2026.

Regional bank presidents hold five of the 12 votes on the Federal Open Market Committee, the central bank body which sets interest rates. Their synchronized five-year terms means a White House—aligned board of governors could weigh in on all the regional bank presidents at once. That has drawn attention from investors already focused on Trump’s influence on the Fed.

“If [Bowman and Waller] allied with whoever fills the two new vacancies, they could remove all 12 presidents, thereby dramatically reshaping the FOMC,” wrote JPMorgan’s Michael Feroli in a recent note.

Still, the process for choosing regional presidents limits Washington’s role. Each of the 12 Federal Reserve banks has a board of directors, divided into three classes. The Class B and C directors, who represent business and community interests, run search processes, interview candidates, and select finalists. The board of governors must approve the choice but cannot propose its own candidate.

Reappointments follow the same framework. Local boards review performance and recommend whether to extend a president’s term. Those recommendations cover leadership, policy contributions, and community engagement. The board of governors then votes on approval. Historically, these reviews have been straightforward, with presidents typically continuing unless they near retirement age or step down voluntarily.

A Trump-appointed board majority could make the 2026 reappointment cycle less predictable. Governors might scrutinize performance reviews more closely or push back against candidates they view as out of step with policy priorities. That wouldn’t give the White House control over replacements, but it could inject uncertainty into a process that has long been routine.

There is also another looming legal question. A legal opinion by the Justice Department’s Office of Legal Counsel in 2019 said that Fed governors are able to remove a bank president “at will.” That opinion has yet to be tested in court.

For markets, the risk isn’t so much a sudden purge of Fed leadership but the perception of political pressure. The central bank’s independence underpins confidence in U.S. assets. If the February 2026 reviews appear politicized, investors could question whether monetary policy decisions are being made on economic grounds. Yields could rise, the dollar could weaken, and volatility could climb at a moment when inflation, tariffs, and budget deficits are already complicating the outlook.

“Central banks insulated from politics are a cornerstone of successful economic policy worldwide. The administration’s efforts to politicize interest rates—an authoritarian tactic—will ultimately hurt American families by driving up costs,” said Michael Madowitz, principal economist at the Roosevelt Institute. “That helps explain why Fed independence has helped keep inflation under 3%, while, after years of political interference in their central bank, Turkey’s inflation rate is over 33%.”

The Fed’s structure was built to prevent that scenario. By giving regional boards primary responsibility and limiting the board of governors to an approval role, Congress sought to shield the central bank from executive power. That framework has held through past transitions, and most experts expect it to continue. But Trump’s willingness to test norms makes the coming reappointment cycle worth watching.

Still, said analysts at Capital Economics in a note, while Trump seems unlikely to completely capture the Fed, his appointees would still hold significant influence. “The implication is that policy decisions will increasingly tilt toward easing when votes are closely contested,” they said.

Cook, the first Black woman to serve on the Fed’s board, has said she won’t resign, and that there is no cause under the law for her removal. She plans to seek an injunction that would allow her to remain on the board while litigation unfolds.

Her attorney, Abbe David Lowell said in a statement Tuesday that “President Trump has no authority to remove Federal Reserve Gov. Lisa Cook. His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action.”

A Federal Reserve spokesperson previously said the central bank will abide by any court decision on the issue of Cook’s continued employment. President Trump on Tuesday said he would also abide by a court decision.

Write to Nicole Goodkind at nicole.goodkind@barrons.com