Trump's nomination of the Federal Reserve Chair is fraught with political calculation and risk:
Deliberately choosing the market's closure time: Trump announced the news after the closing of major global markets on Friday, intending to use the weekend to buffer the market shock. This 'nervous' operation temporarily avoided a stock market crash, but gold prices have already responded by falling 1.27%, exposing concerns about subsequent chain reactions.
Substantial undermining of Powell: Although Powell's term lasts until 2026, announcing a successor nearly a year early directly undermines his policy authority. Market focus shifts to expectations of the new chair, leading Powell to become a 'transitional chair,' severely impacting internal coordination within the Federal Reserve.
Naked intervention in central bank independence: Trump's demand for a '100 basis point rate cut' is pushed forward simultaneously with the nomination of a new chair, with the core demand being to establish a 'compliant' Federal Reserve. St. Louis Fed President Bullard warns that political intervention will undermine the stability of inflation expectations, while former Fed Governor Warsh openly supports the president's right to criticize the central bank, further weakening its independence.
Dilemma of candidate choices: If Trump nominates external loyalists like Warsh, it will confirm political manipulation; if he chooses insiders, it will be difficult to meet aggressive rate cut demands. Regardless of the choice, the credibility of Fed policy will be damaged, potentially triggering a dollar credit crisis.
No way out of policy risk: Compared to previous verbal threats, this formal nomination, if it triggers a market crash, cannot be retracted. The current rise in U.S. stocks is merely a short-term reaction stimulated by rate cut expectations; if future policies waver or internal conflicts become public, global financial markets may face systemic shocks.
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