Trump's war on the Fed sparks inflation warning

Fed governor Lisa Cook is suing the president for trying to fire her. His move is one of the most serious threats to the Reserve in 74 years, writes Katie McQue

- writes Katie McQue

President Trump's move to fire a Federal Reserve governor this week as part of a plan to seize control of US monetary policy has prompted global anxiety about central banking independence and the cost of capital.

Lisa Cook, the first black woman to serve as a Fed governor, sued Trump on Thursday after he announced her sacking for allegedly making false statements on her mortgage. Cook asked a court to declare Trump’s order “unlawful and void”, arguing Trump has no authority to fire her.

The landmark case follows months of attacks by Trump against the Fed, which independently decides interest rates without political approval, and its chair Jerome Powell, whom he has called on to resign.

Trump wants Powell to cut rates by up to three percentage points from the current 4.25 to 4.5% range and is infuriated that this has not yet happened. At the annual Jackson Hole Economic Policy Symposium last week, Powell did signal that interest rates could soon be cut because of growing risks to the economy - not because of political pressure.

Cook is one of seven members of the Fed’s board of governors, a group with sway over big decisions relating to interest rates as well as rules and regulations governing Wall Street.