#UpdateAlert
Trump vs. Powell: Fed Independence in the Crosshairs
Markets are on edge as Donald Trump revives his feud with Fed Chair Jerome Powell.
š» Oval Office Drama
In a closed-door meeting, Trump reportedly showed GOP lawmakers a draft letter to fire Powellāciting either his refusal to cut rates or the $2.5B cost overruns on the Fedās new HQ. Later, Trump softened his stance, saying heās "highly unlikely" to remove Powellāunless fraud is found.
āļø Can the President Fire the Fed Chair?
Factor Summary
Legal Limits The Supreme Court reaffirmed Powell canāt be removed over policy disagreementsāonly āfor cause.ā
No Precedent No U.S. president has ever fired a sitting Fed Chair.
Current Justification Trump's team is investigating the renovation for potential fraud grounds.
š Market Impact & Investor Jitters
Initial reaction: Stocks dipped, yields spiked on firing rumorsāthen stabilized after Trump's walk-back.
Ongoing tension: Traders expect a rate cut in September but remain wary.
Deeper concern: Economists and GOP senators warn that firing Powell could damage the Fedās independence and market confidence.
š What to Watch
1. Market movements tied to legal threats or policy shifts.
2. Outcome of the Fed HQ cost investigation.
3. Any new legal signals that could change presidential authority over the Fed.
š§ Bottom Line
Trump's remarks have already shaken market confidence. Any real attempt to remove Powell could trigger legal battles and a credibility crisis for U.S. monetary policy.
