Trump risks economic calamity by tampering with Fed independence

Main Idea: President Donald Trump’s move to fire Federal Reserve governor Lisa Cook has raised fears that he is trying to weaken the Fed’s independence and pressure interest rate policy.

Key Points:

• Trump says Cook should be removed over mortgage fraud claims, and Cook says she will sue to challenge the decision.
• The Fed sets interest rates based on inflation and job market risks, and outside pressure could distort those decisions.
• Economists and market analysts warn that political control of the Fed could raise inflation, unsettle markets, and hurt households.
• Investors have so far reacted calmly, but long-term Treasury yields rose, showing some concern about future inflation and Fed independence.