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Traders are now assigning more than a 50% probability to a Federal Reserve interest rate cut in September, following reports that President Donald Trump has prepared a termination letter for Fed Chairman Jerome Powell. The speculation, circulating widely on social media platform X, underscores mounting market expectations of a policy shift as Trump continues his public criticism of Powell’s commitment to maintaining elevated interest rates.

Since assuming office in January 2025, Trump has repeatedly pressured Powell to reduce the Fed’s benchmark rate, which remains at 4.25%–4.5%. The President has labeled Powell’s approach as "too late" and "wrong," particularly in light of his aggressive tariff policies, which Powell has warned could exacerbate inflationary pressures. The tension between the White House and the Fed has delayed previously anticipated rate cuts, leaving markets in a state of uncertainty.

The potential removal of Powell, whose term extends to May 2026, raises serious concerns about the Fed’s independence—a key pillar of global financial stability. Legal experts point out that dismissing the Fed chair would require demonstrating "cause," a high legal threshold that makes such a move unlikely. Nevertheless, the mere possibility has injected volatility into market sentiment, with investors weighing the implications of a more politically influenced monetary policy.

The cryptocurrency market, highly sensitive to interest rate fluctuations, stands to experience significant effects from a potential cut. Lower rates could increase liquidity and drive capital into risk assets like Bitcoin. However, analysts caution that abrupt leadership changes at the Fed could trigger instability across equities and digital assets, leading to sharp price swings. Treasury Secretary Scott Bessent has reportedly advised against ousting Powell, warning of potential disruptions to financial markets.
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As the situation develops, traders will closely monitor both political and economic signals, with the Fed’s next moves likely to shape market trajectories in the coming months. Any formal action against Powell could redefine the relationship between the White House and the central bank, with far-reaching consequences for monetary policy and investor confidence.#Follow_Like_Comment