The U.S. financial markets are facing new uncertainties as former President Donald Trump openly criticizes and considers firing Federal Reserve Chair Jerome Powell. This move has sparked concerns about the Fed's independence and the potential negative impact on the market.
Trump Increases Pressure on Powell
On his social media platform Truth Social, Trump called Powell “always TOO LATE AND WRONG” and stated that “getting rid of him couldn’t come soon enough.” He also discussed with former Fed Governor Kevin Warsh about possibly replacing Powell, although Warsh reportedly advised against such a move.
Warren Warns of Market Collapse
Senator Elizabeth Warren, a frequent critic of Wall Street and the Federal Reserve, spoke out in defense of Powell, emphasizing that firing him could lead to a market collapse. She warned that this move would undermine confidence in the U.S. financial system and compared it to authoritarian regimes.
Impact on Financial Markets
Trump’s consideration to fire Powell has raised concerns about market stability. Investors fear that this action could weaken the Fed's independence and lead to significant market volatility. Powell has stated that he has no intention of resigning, and that the law does not allow the president to remove the Fed Chair without a valid reason.
Conclusion
The showdown between Trump and Powell raises serious questions about the independence of the Federal Reserve and the future of U.S. monetary policy. Investors and policymakers must closely monitor the situation to assess the potential impact on the economy and financial markets.