Federal Reserve Chairman Jerome Powell faces mounting attacks from President Donald Trump, who is calling for immediate interest rate reductions and questioning Powell’s leadership. The escalating criticism has raised concerns about central bank independence and triggered market volatility as investors weigh potential implications.
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Presidential Attacks on Powell Escalate Through Social Media
President Donald Trump significantly intensified his attacks on Powell Monday, using Truth Social to label the Federal Reserve chairman a “major loser” while insisting the U.S. economy risks a slowdown without prompt interest rate reductions.
“‘Preemptive Cuts’ in Interest Rates are being called for by many,” Trump wrote, claiming that “virtually No Inflation” exists in the current economy. The president argued that energy costs and prices for “most other things” are declining.
Trump’s post continued with direct attacks on Powell, stating: “With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.”
Administration Explores Options Amid Attacks on Powell
Sources indicate the attacks on Powell may extend beyond rhetoric, as Trump and his team are reportedly studying whether they can legally remove the central bank leader before his term expires in May 2026. Powell, whom Trump appointed during his first administration, has explicitly stated that under law, the president cannot remove him from his position.
Financial experts warn that serious market consequences could follow any attempt to dismiss Powell. Krishna Guha, vice chairman of Evercore ISI, cautioned on CNBC’s “Squawk Box” that “If you start to raise questions about Federal Reserve independence, you are raising the bar for the Federal Reserve to cut. If you actually did try to remove the Federal Reserve chairman, I think you would see a severe reaction in markets with yields higher, dollars lower, and equities selling off.”
“I can’t believe that that’s what the administration is trying to achieve,” Guha added.
Markets React to Attacks on Powell and Fed Independence Concerns
Financial markets demonstrated immediate sensitivity to the attacks on Powell and associated uncertainty. The Dow Jones Industrial Average tumbled nearly 2% (approximately 750 points) within Monday’s first trading hour, while the Nasdaq experienced a 2.6% decline.
Concurrent with these equity market movements, the U.S. dollar slid to its lowest level since 2022. Investors seeking safety amid the turmoil pushed gold prices to record highs, while the benchmark 10-year Treasury yield increased slightly.
Powell’s Stance Amid Attacks on His Leadership
The latest attacks on Powell follow the Fed chairman’s recent economic assessment that suggested Trump’s trade policies could hamper growth and potentially drive inflation higher.
“Tariffs are likely to move us further away from our goals… probably for the balance of this year,” Powell stated at the Economic Club of Chicago. Despite pressure for rate cuts, Powell maintained a cautious approach, saying: “For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
As attacks on Powell continue, economists and investors remain focused on how this unprecedented pressure might affect monetary policy independence and economic stability in the coming months.
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