Cook was nominated by Biden as a Federal Reserve board member in 2022, becoming the first African American woman on the board. She holds a PhD in economics, specializing in economic development and racial inequality, and previously served on the Economic Advisory Council during the Obama administration. She was confirmed by a vote of 51-50, with Republicans criticizing her lack of experience in monetary policy and her ambiguous responses to inflation issues during the hearing, claiming limited foresight in decision-making; Democratic supporters argue that her background contributes to a diversified perspective at the Fed.
Why was Cook appointed? Cook's nomination has a political background, and her research aligns with Biden's diversity policy, naturally catering to the Democratic voter base. Interestingly, from another perspective, Cook's 2022 nomination, viewed in light of the current partisan divisions in the market, could also be seen as an act that undermines the independence of the Federal Reserve?
The Federal Reserve Act stipulates that the president can only dismiss a board member for 'just cause,' but the definition of 'cause' is vague and has no historical precedent. If Cook intends to go to court, the court may provide more definitions of 'cause,' and the independence of the Federal Reserve may be strengthened or weakened by the ruling. Republican media criticize Cook for politicizing appointments, while Democratic media accuse Trump of intervening in Federal Reserve decisions. However, it remains uncertain whether Cook will actually file a lawsuit, as on the surface, she does appear to have legal weaknesses, but a political figure's firm response is to be expected.
In fact, the so-called attack on the independence of the Federal Reserve is more likely just media and market sentiment hype. Both Democrats and Republicans are trying to exploit the situation. However, the incident has indeed triggered short-term support for gold prices and a weakening of the dollar. But multiple important indicators show that the core trend of capital has not changed significantly, and the long-term direction of Federal Reserve policy still relies on economic data.
Be cautious, on one hand, Cook has insufficient credibility and influence over monetary policy, and on the other hand, central bank policy focus still needs to look at data performance. Currently, it is just a political divide amplifying media interpretations, with short-term noise intensifying. Therefore, do not overly believe in the hype surrounding the alleged independence of the Federal Reserve.
Future Focus: The market is concentrating on two directions: first, the legal progress of the Cook loan allegations, whether the evidence is sufficient affects the interpretation; second, whether Trump is targeting other officials (such as Chairman Powell). The current events are a political and legal game, with a short-term impact on the market, but in essence, they do not affect the real economy and capital situation. Investors should act rationally and be wary of being misled by hype.
For passersby, or perhaps the market is more focused on newcomers, believing that the new chair of the Federal Reserve is more worthy of market attention, based on the candidate's professional background and credibility, as well as their intentions for future monetary policy, in interpreting the Phillips curve and employment and inflation indicators, this should be the market's focus.
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