Trump's Bid to Oust a Fed Governor Tests U.S. Law

Nathaniel Wright

Political

Central Bank

Economic

Remarks of Officials

Summary:

Trump's unprecedented bid to fire Fed Gov. Lisa Cook sparks a Supreme Court fight, testing presidential power.

President Donald Trump's move to fire Federal Reserve Governor Lisa Cook has escalated into a high-stakes legal battle, challenging the boundaries of presidential authority over the U.S. central bank. Cook is the first sitting Fed policymaker to be targeted for removal by a president, placing her at the center of a historic power struggle.

This is not the first time Cook has found herself in a pioneering or embattled position. The daughter of a nursing professor and a hospital chaplain, she was one of the first Black students to desegregate schools in her hometown of Milledgeville, Georgia. She has spoken in interviews about the physical scars she still carries from beatings during that period.

Her academic journey was equally groundbreaking. After studying philosophy at Spelman College, she became the first graduate of the historically Black women's institution to win a Marshall Scholarship, which sent her to Oxford University. According to her own accounts, she was convinced to pursue a career in economics by a British economist during a hike up Mount Kilimanjaro in Tanzania.

Cook later earned her PhD in economics from the University of California, Berkeley. One of her dissertation advisers was Barry Eichengreen, an expert on the risks of political interference in central bank policy.

The Legal Showdown at the Supreme Court

The conflict began when President Trump announced on social media that he was firing Cook, citing alleged false statements or "gross negligence" related to her mortgage application paperwork. Cook has denied these allegations as baseless and filed a lawsuit to block her dismissal.

After a lower court sided with Cook, Trump’s administration appealed the decision. The case is now under consideration by the U.S. Supreme Court, with a hearing scheduled for Wednesday.

Eichengreen defended his former student in an interview with economist Paul Krugman last August. "I know Lisa to be careful and ethical," he said. "She's also one of the strongest people I know... I think we have a very strong individual on the other side of this controversy."

From Academia to a Contentious Fed Confirmation

Before joining the Fed, Cook built a distinguished academic and policy career. She taught at Harvard University and was a research fellow at Stanford University's Hoover Institution before becoming an economics professor at Michigan State University in 2005. Her research has often focused on how racial disparities, anti-Black violence, and gender inequality negatively impact innovation and economic growth.

Her public service includes roles as an adviser on the Obama-Biden and Biden-Harris transition teams and as a senior economist at the White House's Council of Economic Advisers from 2011 to 2012.

When President Joe Biden nominated Cook to the Fed's Board of Governors in 2022, her confirmation process was long and divisive. Republican lawmakers accused her of being soft on inflation, and she faced what she described as "anonymous and untrue attacks" on her work. She was confirmed as the first Black woman to serve as a U.S. central banker only after Vice President Kamala Harris cast the tie-breaking 51st vote in an evenly split Senate.

Cook's Policy Focus: Inflation, Rates, and AI

As a Fed governor, Cook has participated in key monetary policy decisions. She voted with her colleagues to raise interest rates throughout 2022 and 2023 to combat rising inflation. However, she also supported the central bank's three rate cuts last year, which were aimed at protecting the labor market from softening. This policy stance contrasts with President Trump's repeated criticisms of the Fed for not implementing larger rate cuts.

In her public remarks, Cook has frequently addressed the economic impact of artificial intelligence, a technology the Trump administration also views as critical for prosperity. She argues that AI has the potential to boost productivity and lower inflation, but cautions that the timing of these benefits is uncertain and they may not be distributed evenly across the workforce.

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James Riley

Daily News

Political

Economic

Remarks of Officials

British Prime Minister Keir Starmer meets with Chinese President Xi Jinping amid efforts to reset diplomatic and economic ties.

Britain and China are set to revive a high-level business dialogue, aiming to restore a "golden era" of economic relations during Prime Minister Keir Starmer's planned visit to Beijing next week. According to sources familiar with the plan, the trip is designed to reset ties after years of strain and will bring together top executives from major companies in both nations.

Starmer's visit would be the first by a British leader since 2018 and signals his administration's goal to repair the relationship with the world's second-largest economy.

Reviving the UK-China CEO Council

The centerpiece of the visit will be the relaunch of the "UK-China CEO Council," a forum first established in 2018 by then-Prime Minister Theresa May and Premier Li Keqiang.

A powerful group of British corporate giants is expected to join the revamped council, including:

• AstraZeneca

• BP

• HSBC

• Intercontinental Hotels Group

• Jaguar Land Rover

• Rolls Royce

• Schroders

• Standard Chartered

Their Chinese counterparts will reportedly include major state-owned and private enterprises such as:

• Bank of China

• China Construction Bank

• China Mobile

• Industrial and Commercial Bank of China (ICBC)

• China Railway Rolling Stock Corporation (CRRC)

• China National Pharmaceutical Group

• BYD

Embassy Deal Paves the Way for Beijing Trip

Negotiations for the visit have been underway for some time but only gained serious momentum recently. Sources indicate that Starmer's trip was largely dependent on the UK granting approval for China to build its largest European embassy in London—a green light that was given on Tuesday.

With this hurdle cleared, an official announcement on the visit and Starmer's schedule could come as soon as Friday. Premier Li Qiang, China's second-highest official, is expected to represent Beijing in the talks.

However, final details are still being arranged. One source noted that the council's official English name is still under discussion, as the British government is hesitant to use "CEO" in the title, while the Chinese side prefers to keep the original 2018 terminology.

Starmer's Push to Mend Strained Relations

In a speech late last year, Starmer criticized previous Conservative governments for a "dereliction of duty" in allowing ties with Beijing to sour, pointing out that French and German leaders had made multiple visits in the same period.

Commercial relations deteriorated significantly after several key UK government decisions, including the 2020 ban on Huawei's participation in the country's 5G network and the 2022 taxpayer-funded buyout of China General Nuclear Power Corporation's (CGN) stake in a UK nuclear plant project.

Reflecting these political sensitivities, sources suggest that both Huawei and CGN, which was part of the original 2018 council, are unlikely to be invited to the new forum.

While the diplomatic groundwork is being laid, some uncertainty remains. One businessperson mentioned their company's CEO had declined the invitation, unable to be sure the visit would proceed. Sources also noted that U.S. President Donald Trump's threats to acquire Greenland could potentially derail the trip.

The original 2018 council aimed to "fast-track two-way investment and expand bilateral trade in a healthier, more balanced direction." Reviving this dialogue signals a mutual desire to return to a more constructive economic partnership.

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Isaac Bennett

Daily News

Political

Remarks of Officials

UK Finance Minister Rachel Reeves reaffirmed the enduring alliance between the United Kingdom and the United States on Wednesday, even as diplomatic tensions mount over Greenland and trade. Speaking at the World Economic Forum in Davos, Switzerland, Reeves described the U.S. as the "closest of allies."

UK Finance Minister Rachel Reeves discusses the UK-US alliance at the World Economic Forum in Davos on January 22, 2025.

"It's an incredibly important relationship and always has been, for the U.K.," Reeves told CNBC on January 22, 2025. "Whether that's about our military and intelligence links, our university and trade links, that continues because it's in our interests that the relationship endures."

However, this foundational partnership is being strained as London navigates a difficult diplomatic path with Washington.

Greenland Dispute Sparks Tariff Threats

The primary point of friction is a growing rift between the U.S. and Europe over the future of Greenland, a Danish territory. U.S. President Donald Trump has threatened to impose escalating tariffs on the U.K. and seven other European countries if they continue to block his bid to take over the Arctic island.

While stressing the need to avoid conflict, Reeves made the UK's position clear. "We don't want to see an escalation, it's in no one's interests," she said, adding, "but we've been very clear on the issue of Greenland."

UK Prime Minister Keir Starmer has attempted to leverage his positive relationship with President Trump to de-escalate the situation and prevent new tariffs on NATO allies. Alongside other European leaders, Starmer has advocated for further discussions while consistently defending the sovereignty of Denmark and Greenland.

Chagos Islands Deal Adds New Fuel to the Fire

Tensions flared again on the eve of the Davos forum when Trump sharply criticized the UK over a separate geopolitical matter: the Chagos Islands. The president lambasted London's May 2025 agreement to transfer sovereignty of the islands to Mauritius.

The deal includes the island of Diego Garcia, which hosts a critical joint UK-U.S. military base. Under the agreement, the British government will lease the base from Mauritius for £101 million ($135.7 million) per year.

While the White House had previously voiced support for the deal in 2024, Trump reversed this stance on Tuesday, calling the move "an act of great stupidity."

"Shockingly, our 'brilliant' NATO Ally, the United Kingdom, is currently planning to give away the Island of Diego Garcia, the site of a vital U.S. Military Base, to Mauritius, and to do so FOR NO REASON WHATSOEVER," Trump posted on the social media platform Truth Social.

Uncertainty Looms Over Future Trade

The combined disputes over Greenland and the Chagos Islands have left the "special relationship" appearing increasingly fragile, casting uncertainty on the future of trade deals between the UK, EU, and the White House. U.S. Secretary of Commerce Howard Lutnick stated on Tuesday that existing trade agreements did not need to be undone.

Speaking from Davos, UK Trade Secretary Peter Kyle suggested the current turmoil could be managed.

"We've had this rodeo before," Kyle told CNBC. "We've been through Liberation Day [when Trump announced global trade tariffs last April], which was quite a moment in global economic terms, and we got through it."

He concluded on a note of cautious optimism: "There is another moment of disruption at the moment, but cool heads will prevail."

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Warren Takunda

Economic

U.S. futures were higher and world shares traded mixed Wednesday ahead of U.S. President Donald Trump’s speech to the World Economic Forum in Davos, Switzerland.

Markets have appeared to steady somewhat after gyrating following Trump’s threats to slap higher tariffs on eight European countries over their opposition to his push for U.S. control of Greenland.

Gold prices crossed the $4,800 mark for the first time, gaining 2.2% as money flowed into assets considered to be safe havens at times of uncertainty.

Bouncing back from steep losses Tuesday, the future for the S&P 500 rose 0.4% and that for the Dow Jones Industrial Average was up 0.2%.

Germany’s DAX shed 0.4% to 24,607.57 and the CAC 40 in Paris slipped 0.2% to 8,050.40. Britain’s FTSE 100 was nearly unchanged at 10,124.24.

Traders were waiting for Trump’s planned speech to world leaders, elites and billionaires gathered in Davos. Trump told reporters he planned to highlight his administration’s accomplishments during his address.

U.S. Commerce Secretary Howard Lutnick, who spoke on a panel on Tuesday, said the U.S. message was that “globalization has failed.”

Trump’s Air Force One returned to Washington after its crew identified “a minor electrical issue” while he was on his way to Davos. He boarded another aircraft and resumed his trip.

In Asian trading, Tokyo’s Nikkei 225 slipped 0.4% to 52,774.64. Markets in Japan have been riled both by geopolitical uncertainty and by domestic issues.

Japanese Prime Minister Sanae Takaichi has called a snap election for Feb. 8, sending yields of long-term government bonds to record levels. The assumption is that Takaichi, who is capitalizing on strong public support ratings to try to consolidate a majority for her Liberal Democratic Party, will cut taxes and boost spending, adding to the challenges Japan faces in handling its massive government debt.

The yield on the 40-year Japanese government bond was trading at 4.061% early Wednesday, down from the all-time high of 4.22% that it hit on Tuesday.

South Korea’s Kospi gained 0.5% to 4,909.93.

Hong Kong’s Hang Seng rebounded to add 0.4% to 26,585.06. The Shanghai Composite index edged 0.1% higher, to 4,116.94.

In Australia, the S&P/ASX 200 gave back 0.4% to 8,782.90.

Taiwan’s Taiex fell 1.6% and India’s Sensex lost 0.4%.

Trump has said he will impose 10% tariffs on Denmark, Norway, Sweden, Germany, France, the United Kingdom, the Netherlands and Finland beginning in February. That would be on top of a 15% tariff specified by a trade agreement with the European Union that has yet to be ratified.

European leaders have hit back as Washington’s relations with its Western allies sour, considering countermeasures, including perhaps slow-walking ratification of the trade agreement or ordering retaliatory tariffs, analysts say.

On Tuesday, the S&P 500 fell 2.1%, the steepest drop for the benchmark index since October. The Dow industrials dropped 1.8% and the Nasdaq composite fell 2.4%.

The Federal Reserve is set to meet next week for a policy meeting, and Wall Street is betting it will hold steady its benchmark interest rate. Japan’s central bank will wrap up its first monetary policy meeting of 2026 on Friday.

In other dealings early Wednesday, U.S. benchmark crude oil lost 71 cents to $59.65 per barrel. Brent crude, the international standard, shed 88 cents to $64.04 per barrel.

The U.S. dollar dropped to 157.94 Japanese yen from 158.16 yen. The euro fell to $1.1708 from $1.1726.

Source: AP

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King Ten

Daily News

Political

Economic

Remarks of Officials

Formal negotiations to finalize a landmark trade deal between the United States and Switzerland are scheduled to begin in Bern in the first half of February. According to sources familiar with the matter, the talks aim to lock in a preliminary agreement that would slash US tariffs on Swiss goods from 39% to 15%, the highest rate among advanced economies.

February Talks in Bern Mark Critical Next Step

A delegation from the US Trade Representative's office will travel to the Swiss capital for the first formal round of discussions on a legally binding accord. This visit is a significant development, as previous talks for the framework deal announced in November were conducted solely by Swiss delegations traveling to Washington. Insiders suggest this shift makes the process feel less one-sided.

Negotiators on both sides are reportedly aiming to complete the final agreement by the end of March. This timeline is crucial, as the US has threatened to reconsider its concessions if no final deal is reached by then, according to a note in the Federal Register.

High-Level Support Voiced at Davos

The negotiations appear to have strong political backing. Speaking in Davos on Wednesday, US Treasury Secretary Scott Bessent confirmed he was meeting with Switzerland's President, Guy Parmelin, later that day and described the relationship between the two nations as "very good."

Bessent praised Parmelin as a "fantastic advocate" for his people. "I think with his leadership that we will be able to land a trade deal that is fair for the American people and ensures continued prosperity in Switzerland," he stated.

Official channels have remained quiet on the upcoming talks. A spokesperson for the Swiss economy ministry declined to comment, while the USTR could not be immediately reached outside of office hours.

What's on the Table: Tariffs vs. Investment

The proposed agreement is built on a clear set of trade-offs. In exchange for the substantial reduction in US tariffs, Switzerland has committed to two key concessions:

• A $200 billion investment pledge from Swiss companies.

• Easier market access for certain American agricultural goods, including fish, seafood, and some meats.

The tariff relief has already taken effect retroactively from the date of the initial deal, but its permanence is contingent on successfully finalizing the accord in the coming weeks.

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Isaac Bennett

Political

Economic

Remarks of Officials

Washington Criticizes French Proposal at Davos

The United States has sharply criticized a French proposal for a NATO-led military exercise in Greenland, escalating a diplomatic feud over President Donald Trump's ambitions to take control of the territory.

Speaking Wednesday at the World Economic Forum in Davos, Treasury Secretary Scott Bessent warned European nations against sending troops to the island. "If this is all President Macron has to do when the... French budget is in shambles, I would suggest that he focuses on other things for the French people," Bessent told reporters.

The French suggestion came after eight European allies participated in a Danish-led planning exercise in Greenland. French President Emmanuel Macron argued that the entire NATO alliance should organize a drill on the island, which is a semi-autonomous territory of Denmark. Bessent questioned the message behind these military moves just before Trump was scheduled to arrive in Davos.

Trump Escalates Pressure with Tariff Threats

Tensions are running high as global leaders brace for a potential clash between Trump and European allies. The conflict centers on Trump's demands that Denmark relinquish Greenland to the United States.

The US president has intensified his campaign to acquire the island, threatening to impose tariffs on eight NATO allies who oppose his plans. Underscoring his intentions, Trump posted an AI-generated image on Tuesday showing him planting a US flag on Greenland's landscape.

In response, European leaders are reportedly considering economic countermeasures if the tariffs are implemented on February 1. The European Parliament has already signaled it may delay the ratification of a major EU-US trade deal over the crisis. However, Bessent forcefully dismissed the possibility of significant European retaliation, urging nations to honor their existing trade agreements with the US.

Calls for De-escalation and an Arctic Strategy

Amid the standoff, some leaders are searching for a diplomatic off-ramp. NATO Secretary General Mark Rutte is reportedly working behind the scenes to diffuse the tension.

Finnish President Alexander Stubb called for a dedicated NATO summit to address Arctic security, suggesting the intent behind the military exercises had been misunderstood. "Now what we need to do is to bring down the temperature," Stubb told Bloomberg. "I wish we could have a NATO summit where we all agree on a new Arctic security structure."

Interest in Arctic security has grown within NATO, particularly since Finland and Sweden joined the alliance following Russia's invasion of Ukraine.

Greenland and Denmark Prepare for Contingencies

Denmark has stated that its military exercises were intended to address US security concerns and had invited American participation. The country is also drafting plans for a larger deployment of up to 1,000 Army soldiers to Greenland for exercises in 2026, with potential support from its Navy and Air Force, according to Danish broadcaster TV2. A final decision on the scale has not yet been made.

Meanwhile, Greenland's Prime Minister Jens-Frederik Nielsen advised the territory's population and authorities to begin preparing for a possible military invasion, while acknowledging it remains an unlikely scenario.

Greenland has a population of 57,000 and is part of the Kingdom of Denmark. It maintains its own government for most domestic affairs, while Denmark manages its defense and foreign policy.

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Gerik

Economic

Headline Inflation Edges Higher Than Expected

The UK inflation rate increased to 3.4 percent in December, exceeding the 3.3 percent forecast by economists surveyed by Reuters. The data marked a modest acceleration from November, when inflation cooled to 3.2 percent, a slowdown that had previously supported the Bank of England’s decision to cut interest rates at its final policy meeting of last year. While the increase was small in magnitude, it interrupted the recent disinflation trend and reintroduced caution into the policy outlook.

Core inflation, which strips out volatile components such as energy, food, alcohol, and tobacco, remained unchanged at 3.2 percent. This stability suggests that underlying price pressures have not intensified materially, even as headline inflation ticked higher.

Drivers Behind December’s Price Increase

According to the Office for National Statistics, December’s rise was driven primarily by higher tobacco prices following recently introduced excise duty increases. Temporary factors also played a role, with airfares rising more sharply than a year earlier, reflecting the timing of return travel over the Christmas and New Year period. Food prices contributed to the upside as well, particularly bread and cereals, indicating some persistence in essential household costs.

These upward pressures were partially offset by easing rents inflation and lower prices across several recreational and cultural categories. This offsetting dynamic points to a mixed inflation profile, where specific policy-driven and seasonal factors are lifting prices, while broader demand-related pressures continue to moderate.

Currency Reaction And Market Interpretation

Sterling showed little reaction to the data, trading largely flat against the US dollar at around $1.3231. The muted currency response suggests that markets view the inflation surprise as marginal rather than a decisive shift in the policy trajectory. Instead, investors appear focused on the broader trend, which still points toward gradual cooling rather than renewed inflationary acceleration.

The data arrive alongside recent labour market figures showing further cooling in employment conditions, complicating the interest rate outlook. While headline inflation remains above target, moderating wage growth has reduced fears of a wage–price spiral. This weakens the case for maintaining a restrictive stance for an extended period, even as short-term inflation volatility persists.

Scott Gardner of J.P. Morgan Personal Investing noted that a small monthly increase is unlikely to trouble policymakers in the near term, particularly given the downward trajectory in pay growth. He argued that if wage moderation continues and feeds through into inflation, it could eventually increase pressure on the Bank of England to cut rates more quickly than currently anticipated. Markets are pricing in one to two rate cuts over 2026, though that expectation remains sensitive to incoming inflation data.

Policy Caution Likely To Persist

Matthew Ryan, head of market strategy at Ebury, expects the central bank to remain on hold for at least the next couple of meetings. He pointed out that while more hawkish members of the Monetary Policy Committee have long warned about upside inflation risks, those arguments are losing traction as the employment outlook deteriorates and wage pressures ease.

This suggests a relationship of correlation rather than direct causation between December’s inflation uptick and future policy decisions. While higher prices complicate the narrative, they do not yet overturn the broader disinflation trend. As a result, the Bank of England is likely to prioritise confirmation of sustained moderation in wages and core inflation before committing to further rate cuts, keeping policy finely balanced as 2026 unfolds.