Donald Trump’s attempts to influence the US Federal Reserve could risk plunging America into a period of 1970s-style inflation and trigger a global backlash in financial markets, economists have warned.

After the US Department of Justice (DoJ) launched a criminal investigation into Jerome Powell, the current Fed chair, investors said efforts by the White House to pressure the US central bank to cut interest rates would put the world economy at risk.

Analysts drew parallels with the 1970s when US inflation soared after the then president, Richard Nixon, pressured the then Fed chair, Arthur Burns, to ease monetary policy to help smooth his 1972 election campaign.

Atakan Bakiskan, US economist at Berenberg bank, said: “If the Fed pursues an ultra-accommodative monetary policy despite higher inflation, the result could resemble the 1970s in a worst-case risk scenario.

“Moreover, if the Fed acts on politics rather than data, foreign investors could pull back on financing the US debt and seek new safe havens.”