Trump's Fed Fury Escalates as Interest Rate Decision Looms

US President Donald Trump has reignited his battle against the Federal Reserve, targeting Fed Governor Lisa Cook over unproven mortgage fraud allegations. This move comes just three weeks before a critical Fed meeting where every vote counts in the increasingly split committee.

The White House's letter to Cook demanding her response within three weeks suggests that Trump is anxious about the potential for interest rates to rise as soon as next month, and realizes his appointee, Chair Kevin Warsh, may be unable to stop it.

Market analysts see a 75% chance of a quarter-point rate increase by the midterms. The outcome at the September 15-16 meeting is seen as a coin toss, with inflation and energy shock being the main drivers.

SGH Macro Advisors chief US economist Tim Duy notes that this suggests Warsh is either unwilling or unable to back Trump's push to slash rates in the face of elevated inflation. Warsh himself may wish for more room to complete his reforms and make his own policy case, but keeping his distance may prove difficult.