On Monday, President Donald Trump escalated his campaign against Federal Reserve Chairman Jerome Powell, labeling him a “major loser” and asserting that the U.S. economy could experience a downturn unless interest rates are cut promptly.
Trump expressed his views on Truth Social, stating that many are calling for “preemptive cuts” in interest rates.
“Given these positive cost trends, which I accurately predicted, it is unlikely there is any inflation. However, the economy may slow down unless Mr. Too Late, a major loser, lowers interest rates now,” Trump remarked.
This latest critique of Powell, whom Trump appointed during his first term, coincides with discussions among the president’s team about the legal possibility of dismissing the Fed chairman before his term concludes in May 2026.
For his part, Powell has asserted that the law protects him from being removed by the president.
An attempt to dismiss Powell could provoke a significant sell-off in U.S. equity markets, according to Krishna Guha, vice president at Evercore ISI, who shared insights during a Finance Newso appearance on Monday.
“Raising questions about the independence of the Federal Reserve would complicate matters for the Fed when it comes to cutting rates. If there was a serious move to oust the chairman, the market reaction would likely be severe, with rising yields, a weakening dollar, and declining stock prices,” Guha explained on “Squawk Box.”
He further expressed disbelief at the potential objectives of the administration’s actions.
The stock market, already grappling with increased uncertainty due to the Trump administration’s expansive tariff initiatives, suffered further losses on Monday morning. The Dow Jones Industrial Average plummeted by 750 points, reflecting a nearly 2% decline within just the first hour of trading, while the Nasdaq dropped 2.6%.
The U.S. dollar saw a downturn, reaching its lowest level since 2022. Amid the turbulence in global markets, investors are gravitating toward safe-haven assets like gold, which reached record pricing on Monday, while the benchmark 10-year Treasury yield edged upward.
Trump’s recent criticisms of Powell followed the Fed chairman’s earlier comments suggesting that the president’s ongoing trade war could hinder economic growth and contribute to inflation.
During a speech at the Economic Club of Chicago, Powell remarked that tariffs “are likely to move us further away from our goals… probably for the balance of this year.”
He also refrained from indicating that interest rate cuts would be imminent, stating, “For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
This is breaking news. Please refresh for updates.
— Finance Newso’s Alex Harring contributed to this report.
