WASHINGTON, D.C. — A lawyer for Federal Reserve Governor Lisa Cook has publicly criticized President Trump’s newly formed investigation into her, saying the committee lacks objectivity and could jeopardise the Fed’s independence, sparking a sharp market reaction and raising concerns among investors about future policy stability.

The lawyer, who spoke on behalf of Cook, described the committee as “politically motivated” and highlighted the absence of any independent oversight. “This is a serious attack on the independence of the Fed,” the lawyer said. Cook has served on the Board of Governors since 2018 and is a key figure in shaping monetary policy.

According to the Federal Reserve, the committee is composed of 12 members, all appointed by the president, and is tasked with reviewing Cook’s tenure and actions. The composition and mandate of the panel have drawn criticism from economists who argue that such a body undermines the central bank’s credibility and could influence its future decisions.

Market Impact

Financial markets responded swiftly. The S&P 500 fell 0.5% in the afternoon trading session, while the Nasdaq dropped 0.7%. Treasury yields rose, with the 10‑year note moving up 4.2 basis points, reflecting heightened uncertainty about the Fed’s policy trajectory.

Investors are concerned that a politically driven inquiry could create a perception of instability in the Fed’s decision‑making process. “The committee’s composition raises legitimate concerns about impartiality,” said a former Fed official who asked to remain anonymous. The uncertainty may widen bond spreads and delay investment decisions.

Economists warn that any perceived erosion of the Fed’s independence could undermine confidence in its ability to manage inflation. If policy decisions become seen as politically driven, it may prompt the market to reassess risk premia, potentially affecting global capital flows.

Cook’s legal team has called for an independent review of the committee’s charter, insisting that the process must adhere to established governance norms to preserve the Fed’s credibility and support sustained market confidence.