U.S. President Donald Trump has once again launched a sharp attack on Federal Reserve Chair Jerome Powell, reigniting anxiety across global financial markets. Trump, who has repeatedly criticized the Fed for keeping interest rates too high, openly suggested that Powell should step down—despite lacking the legal authority to remove him over policy disagreements.

Calling Powell’s resignation “a great thing,” Trump expressed frustration that the central bank has refused to cut rates, even as signs of a weakening global economy grow. The renewed pressure has sparked concerns that political interference in the traditionally independent Federal Reserve could fuel long-term inflation and destabilize the economy.

Market Response: Bonds, Dollar, and Inflation Risks

Investors wasted no time reacting:

🔹 Yields on long-term U.S. Treasury bonds climbed, signaling rising inflation expectations.

🔹 The U.S. dollar weakened against most major currencies as traders braced for looser monetary policy.

🔹 The prospect of premature rate cuts raised alarms about an overheating economy.

Guy LeBas, chief fixed income strategist at Janney Capital Management, warned that if the Fed gives in to political pressure and slashes rates hastily, it could trigger a significant jump in yields—potentially measured in percentage points, not just basis points.

A steeper yield curve is especially troubling for homeowners and businesses, as it means higher borrowing costs for long-term loans like 30-year mortgages, car loans, and corporate bonds.

Wall Street Defends Fed Independence

JPMorgan Chase CEO Jamie Dimon issued a strong warning, stating that central bank independence is vital for economic stability. During a recent investor call, he cautioned that undermining the Fed’s autonomy could lead to serious unintended consequences.

Other economists agree: the Fed’s credibility hinges on its ability to act independently of political pressure. If markets start believing that the Fed is taking orders from the White House, volatility could spread beyond bonds to equities, commodities, and global currencies.

Powell Holds Firm, Trump Turns Up the Heat

Minutes from the Fed’s June 17–18 meeting offered little support for a rate cut at the upcoming July 29–30 policy meeting. Most officials remained concerned about inflation risks—particularly those stemming from Trump’s protectionist trade policies. With tariffs still in place on tens of billions of dollars worth of goods, inflationary pressures are already mounting.

Yet Trump and his advisers continue to double down. In recent weeks, senior officials have appeared on financial news shows and social media, repeating calls for lower rates—and suggesting Powell should resign if he refuses to comply.

#TRUMP , #Powell , #FederalReserve , #MarketVolatility , #Fed

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