Experts See Higher Inflation, Borrowing Costs Once Fed Comes Under Trump’s Thumb

President Donald Trump’s attempt to fire a member of the Federal Reserve’s governing board has alarmed economists and legal experts, who say it poses the gravest threat to the central bank’s independence in decades, Christopher Rugaber reported for the Associated Press (AP).

Trump recently moved to fire Lisa Cook, the first Black woman appointed to the Fed’s seven-member board — the first time in the institution’s 112-year history that a president has sought to dismiss a governor.

Analysts warn that if Trump succeeds in reshaping the Fed into a loyal body that slashes short-term interest rates, the result would likely be higher inflation and, eventually, higher borrowing costs for mortgages, car loans, and business financing.

Recently, Trump moved to fire Lisa Cook, the first Black woman appointed to the Fed’s seven-member board — the first time in the institution’s 112-year history that a president has sought to dismiss a governor.

Trump cited allegations, raised by one of his own appointees, that Cook committed mortgage fraud. Cook has filed a lawsuit seeking to block her removal, arguing the charges are a pretext for Trump’s effort to seize control of the Fed.

A court may rule next week on whether to temporarily halt her dismissal.

“The particular case of Governor Cook is not as important as what this latest move shows about the escalation in the assaults on the Fed,” said Jon Faust, a Johns Hopkins economist and former adviser to Fed Chair Jerome Powell. “In my view, Fed independence now hangs by a thread.”