US financial markets faced significant downturns as President Trump's attacks on Federal Reserve Chair Jerome Powell escalated, creating concern about economic stability.
Stocks and Dollar Experience Sharp Decline Amid Trump's Criticism of Fed Chair
Stocks and Dollar Experience Sharp Decline Amid Trump's Criticism of Fed Chair
President Trump continues to target Jerome Powell, urging interest rate cuts to stimulate the economy.
US stocks and the dollar witnessed a sharp decline as President Donald Trump ramped up his verbal assaults on Federal Reserve Chair Jerome Powell, labeling him “a major loser” for not acting to lower interest rates. Trump took to social media to criticize Powell, urging the Fed Chair to cut rates “pre-emptively” to bolster the economy, emphasizing that Powell had failed to react swiftly to economic changes. “There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” he expressed in his post.
The escalating feud between Trump and Powell adds to market volatility, reflecting Trump’s frustration with the Fed's monetary policy amid his own tariff strategies, which have contributed to stock market drops and recession anxieties. As a result, the S&P 500, an index of 500 leading US companies, fell approximately 3% during early afternoon trading sessions on Monday, marking a 12% drop since the beginning of the year. The Dow Jones Industrial Average dipped by 2.9% and has lost around 10% for the year, while the Nasdaq index declined more than 3.4%, down about 18% year-to-date.
In a notable twist, the dollar, typically regarded as a safe-haven asset, also faltered against other currencies, with the dollar index tumbling to the lowest point since 2022. Simultaneously, interest rates on US government bonds surged as investors sought higher returns for holding Treasuries. Trump's criticism of Powell is not new; during his first term, he also considered dismissing him. Following Trump’s recent tirade, he publicly demanded Powell’s firing last week, stating on social platforms, “Powell's termination cannot come fast enough.” This potential action raises questions regarding the independence of the Fed, a fundamental principle in US monetary policy.
Contextually, Powell has previously indicated that he does not believe the president holds the legal authority to dismiss him. However, one of Trump's leading economic advisers confirmed that the possibility was under review as the stock market closed for trading last Friday. As the tension within the economy mounts, questions about leadership and direction at the Fed continue to loom large over the financial landscape.
