President Trump’s attempt to fire Fed Governor Lisa Cook looks set to go the courts, which will determine the extent and limits of the administration’s ability to influence monetary policy. It remains unlikely that Trump will be able to capture a majority of the 12-person FOMC voting committee during his term, but it is clear that we are heading back to a world in which the Fed is far more politicised. That risks greater uncertainty about the interest rate outlook and, by extension, higher long-term interest rates.
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