Conflicting Jerome Powell Fed Chairman And Donald Trump U.S. President (Source: AFP)Donald Trump, U.S. President, has restarted public pressure on Federal Reserve (Fed) Chairman Jerome Powell, causing the financial markets to shake. President Trump said on the 21st (local time) on social media TruthSocial that 'many are calling for a preemptive rate cut,' calling Powell 'Mr. Too Late' and 'a major loser' while continuing his strong criticism.President Trump claimed that U.S. inflation is now virtually stable, warning, 'Energy and food prices have dropped significantly. If rates are not cut in this situation, the economy may slow down.' This statement aligns with the argument that the Fed should offset economic uncertainty from recent tariff policies with a rate cut.President Trump also mentioned that 'Powell's term should end soon,' even suggesting the possibility of dismissal. In fact, Kevin Hassett, chairman of the White House National Economic Council (NEC), admitted that they are considering Powell's dismissal, and Treasury Secretary Scott Bassent also hinted at an interview with a successor candidate, fueling the move for a replacement.Chairman Powell emphasized the Fed's independence, stating that he has no intention of voluntarily resigning. In a dialogue with the Chicago Economic Club, he explained, 'The Fed's independence is a principle supported by both parties, and it is legally protected.' He added, regarding Trump's efforts to dismiss him and related Supreme Court lawsuits, 'It seems that this will not apply to the Fed, but we are watching closely.'Soon after Trump's remarks, the market reacted sensitively. The New York Stock Exchange saw all major indices fall by more than 2%, and the 10-year Treasury yield rose to 4.4%. The VIX, known as the fear index, surpassed the 30 mark. News of Amazon's data center investment suspension also hit the Philadelphia Semiconductor Index, and Tesla fell more than 5% on performance concerns.Experts warn that attempts to threaten the Fed's independence itself could cause serious anxiety in the markets. Krishna Guha, vice chairman of Evercore ISI, analyzed, 'Attempting to dismiss the Fed chairman will result in undermining market confidence more than the rate cut itself,' potentially leading to higher rates, a weaker dollar, and a stock market sell-off. He added, 'Whether this is really what the administration wants is questionable.'Professor Francesco Bianchi, an economist at Johns Hopkins University, said regarding this, 'Trump's open pressure actually lowers the market's rate expectations significantly,' adding, 'Even if the Fed is independent, public opinion and political pressure cannot be ignored.'Currently, Chairman Powell was appointed by President Trump in 2018 and has his term guaranteed until May 2026, with reaffirmation from President Joe Biden. However, as President Trump bluntly reveals his intention to dismiss Powell during his potential second term, concerns are growing that this could be a significant inflection point for the Fed's independence and future monetary policy operations.
