President Donald Trump’s attacks on Federal Reserve Chair Jerome Powell have raised concerns about the central bank’s independence and the stability of the US economy. Trump has called Powell “a major loser” for not lowering interest rates to counteract the inflationary impacts of the president’s tariffs. The stock markets have reacted negatively to Trump’s criticism of Powell.
The Dow ended Monday down 2.5%, while the Nasdaq Composite fell over 2.5%, and the S&P 500 dropped 2.4%. Former tech stock favorites like Tesla and Nvidia saw their values decline, and the dollar fell to multiyear lows against most major currencies. Powell has spoken out about Trump’s tariffs, warning that they might force the Fed’s hand and suggesting that the central bank does not plan to cut interest rates soon.
He said, “Tariffs are highly likely to generate at least a temporary rise in inflation.
trump’s criticism impacts stock markets
The inflation effects could also be more persistent.”
The Fed has traditionally been seen as a nonpartisan, non-political federal agency, but Trump has recently suggested the idea of firing Powell, whose term expires in May 2026.
However, it’s unclear whether Trump has the authority to remove Powell from his post. Powell has emphasized the importance of the Fed’s independence from political pressure. He said, “Our independence is a matter of law.
We serve very long terms, so we’re protected by the law.”
The White House economic adviser Kevin Hassett told reporters that the administration “will continue to study” if they can legally fire Powell. Fed officials are scheduled to meet next on May 6 and 7 to discuss potential changes to the interest rate. The outcome of this meeting and Trump’s future actions could have significant implications for the US economy and financial markets.