By Leela de Kretser, Global Page One Editor

Lisa Cook is determined to fight back. The Federal Reserve governor has filed a lawsuit claiming the president has no power to fire her.  

With Abe Lowell as her attorney, the legal battle is sure to be a blockbuster that could go all the way to the Supreme Court, where a conservative majority has at least tentatively allowed Trump to fire officials from other agencies, though it recently signaled the Fed may qualify for a rare exception from direct control by the president. 

Regardless of the outcome of Cook’s case, Trump’s unprecedented attacks on Fed policymakers are emerging as a major threat to central bank credibility. My colleague Francesco Canepa says central bankers worldwide are worried about interference by governments and maintaining the key principle of independence that has helped them keep inflation lower since the mid-1980s.  

The fallout has ramifications across economies and markets. European Central Bank policymaker Olli Rehn said it best: 

"If the central bank's independence were truly to crumble, and the U.S. Federal Reserve began making decisions on grounds other than sound monetary policy principles — for example, because the president demands lower interest rates — the inevitable consequence would be inflation picking up," Rehn told a panel in Turku, Finland. 

For traders, any hint that inflation is not under control is likely to push down the value of long-dated U.S. debt.  Tim Graf, head of EMEA macro strategy at State Street in London, said 10-year yields would be below 4% without the concerns on tariffs and the discussion of Fed independence.  

Out of Powell’s statements in Jackson Hole, and before Trump’s move on Cook, markets were embracing a quarter percentage point cut to interest rates in September. That is still broadly held as the belief going into the September 16-17 meeting – futures have an 86% probability on it.  

But what happens after that is anyone’s guess. Bets that the Fed will accelerate by another half percentage point by the end of the year are 50-50, write economics reporters Ann Saphir and Michael S. Derby. They reported that several Wall Street analysts have told clients they are tearing up prior forecasts. 

Carmel Crimmins is out this week, so Leela de Kretser and Kate Turton are writing the newsletter, and Kim Vinnell is hosting the podcast. Carmel will be back next week. If you miss her, please drop her a line on LinkedIn or reply to this email for when she gets back. Or you can listen to the “Shadow Fed chair” episode of Reuters Econ World that she taped back in July. 

Fees and levies make up nearly 60% of electricity bills for industrial users.

"... after ChatGPT, and particularly as AI systems scaled up and became more powerful, it's been less a question of efficiency or sustainability or similar concerns and more a question of capacity."

Tech Reporter Jeffrey Dastin on the Econ World podcast.

Artificial intelligence is burning through electricity. Guest host Kim Vinnell speaks to Dastin, energy correspondent Laila Kearney, and Colleen Howe, who covers China's power industry, about the new energy race between tech giants and intensifying geopolitical rivalries.