President Trump’s blistering attack on Fed Chair Jerome Powell triggered a stock market plunge as he lambasted the central banker for delaying interest rate cuts amid growing economic concerns.
At a Glance
- Trump called Federal Reserve Chair Jerome Powell “a major loser” and “Mr. Too Late” in a Truth Social post
- Markets reacted dramatically with the Dow falling 1,088 points and the Nasdaq dropping 3.2%
- Trump advocated for preemptive interest rate cuts to prevent economic slowdown
- The White House is reportedly discussing whether Powell could be fired
- Powell intends to complete his term through May 2026 despite mounting pressure
Trump’s Sharp Rebuke Rattles Markets
President Donald Trump unleashed a scathing critique of Federal Reserve Chairman Jerome Powell on Truth Social, dubbing him “a major loser” and “Mr. Too Late” for his reluctance to implement interest rate cuts. The verbal assault coincided with a significant market downturn, as the Dow Jones plummeted 1,088 points, the Nasdaq fell 3.2%, and the S&P 500 dropped more than 2.8%. Trump’s comments emphasized his belief that Powell has consistently been “always too late and wrong” regarding monetary policy decisions, particularly concerning interest rate adjustments that could potentially stave off economic decline.
Market instability intensified beyond equity indices, with the VIX volatility index surging over 14%, gold futures climbing to new heights, and the U.S. dollar hitting multi-year lows against major currencies. These financial indicators signal growing investor anxiety about the Federal Reserve’s current monetary stance and potential political interference in what has traditionally been an independent institution. Trump’s criticism centers on his assertion that there is “virtually no inflation” in the current economy, making Powell’s hesitation to lower rates both unnecessary and potentially harmful.v
White House Contemplates Powell’s Future
The controversy has expanded beyond social media posts, with Kevin Hassett, director of the White House National Economic Council, notably declining to defend Powell during recent interviews. Instead, Hassett revealed that discussions were taking place within the administration about whether the President has the authority to remove the Federal Reserve Chairman from his position. This unprecedented consideration has intensified market concerns about potential threats to the central bank’s independence, a cornerstone principle that has historically insulated monetary policy from political pressure.
Global financial markets are closely monitoring these developments, as the independence of the Federal Reserve is widely considered essential for economic stability. The situation is particularly delicate given that Powell was originally appointed by Trump himself to lead the central bank. Despite the mounting pressure, Powell has maintained that he will not resign and intends to serve his full term through May 2026, creating a potential standoff between the Federal Reserve and the White House that could have far-reaching implications for American monetary policy.
Economic Policy Conflict Intensifies
The core of the dispute centers on divergent views about economic priorities. Trump has advocated for preemptive interest rate reductions, arguing they are necessary to prevent an economic slowdown before it materializes. Powell, conversely, has expressed caution about making hasty cuts, particularly in light of Trump’s proposed tariff policies, which the Fed Chair warned could potentially reignite inflation. Powell had indicated that the central bank would need to evaluate the impact of any new tariffs before adjusting monetary policy, a stance that directly conflicts with Trump’s call for immediate action.
Trump’s Truth Social post further complicated matters by suggesting Powell’s reluctance to lower rates during the election period was politically motivated to benefit Joe Biden. This accusation strikes at the heart of Federal Reserve independence, implying that monetary decisions might be influenced by political considerations rather than economic data. The brewing conflict between the administration and the Federal Reserve has created significant uncertainty for investors and businesses, contributing to the market volatility as participants attempt to predict how this unprecedented tension might resolve in the coming weeks.
