US Stock Market Plummets as Trump Threatens to Fire Fed Chair Jerome Powell
The dollar weakened and equities fluctuated on Tuesday as US President Donald Trump’s latest salvo against Federal Reserve boss Jerome Powell added fuel to fears about the central bank’s independence.
Trump’s comments came after the US tariff blitz caused ructions on global trading floors, and investors are now dealing with the added worry that the US president will try to remove the country’s top banker.
Trump took a swipe at Powell last week for his warning that the sweeping levies would likely reignite inflation, saying his “termination cannot come fast enough.” He repeated his criticism on Monday, calling on the Fed boss to make pre-emptive cuts to interest rates and labeling him a “major loser” and “Mr Too Late.”
The outbursts have fanned concern that Trump is preparing to oust Powell. Panicked Wall Street investors dumped US assets, with all three main indexes ending down around 2.5% on Monday. The rush for safety saw gold hit yet another record above $3,500.
Analysts warned of another rout if Trump were to try to fire the Fed boss, which many said could cause a crisis of confidence in the US economy. “Were Powell to be fired, the initial reaction would be a huge injection of volatility into financial markets, and the most dramatic rush to the exit from US assets that it is possible to imagine,” said Pepperstone strategist Michael Brown.
