NEWS STORY : U.S. Markets Tumble Amid Escalating Clash Between President Trump and Fed Chair Jerome Powell
STORY
U.S. financial markets experienced significant turmoil today as the ongoing dispute between President Donald Trump and Federal Reserve Chair Jerome Powell intensified, raising concerns about the central bank’s independence and the nation’s economic stability. President Trump publicly criticised Powell on social media, labelling him a “major loser” and urging the Federal Reserve to cut interest rates to stimulate the economy. This attack comes despite inflation rates remaining above the Fed’s 2% target, with food prices continuing to rise and Trump’s new tariff policy being seen as inflationary.
In response, Powell reaffirmed the Federal Reserve’s commitment to its mandate and indicated he would not resign if asked by the President. He emphasised the importance of the Fed’s independence in making decisions aimed at controlling inflation and ensuring long-term economic health. Powell refused to match the personal abuse thrown by the President, who some analysts have suggested is trying to distract from his chaotic economic policy.
The public feud has unsettled investors, leading to a sharp decline in major stock indices. The Dow Jones Industrial Average fell by 1,000 points, while the S&P 500 and Nasdaq each dropped nearly 3%. The U.S. dollar also weakened, hitting a three-year low, as investors sought safe-haven assets like gold, which surged to record highs. Analysts warn that undermining the Federal Reserve’s autonomy could have long-term repercussions for the U.S. economy, potentially leading to higher inflation and reduced investor confidence. The central bank is expected to carefully assess the situation in its upcoming policy meetings, balancing the need to control inflation with the risks posed by political pressures.
As the situation develops, market participants and policymakers alike will be closely monitoring the dynamics between the White House and the Federal Reserve, given their significant implications for economic policy and financial stability.
