#TrumpVsPowell The feud between Donald Trump and Jerome Powell, the Federal Reserve Chair, has been escalating, with Trump pressuring Powell to cut interest rates. Here's a breakdown of the situation ¹ ²:

- *Why is Trump pressuring Powell?* Trump believes that lower interest rates will boost the economy by reducing borrowing costs. He's cited the European Central Bank's recent rate cuts as an example.

- *How is the Fed responding?* Powell and other Fed officials have pushed back, emphasizing that rate decisions are data-driven, not politically motivated. Powell stressed the need for "greater clarity" before adjusting rates, highlighting risks tied to Trump's tariff proposals, which could fuel inflation.

- *Could the Fed's independence be at risk?* Trump's public attacks on Powell have raised concerns about the central bank's autonomy. Trump has reportedly explored firing Powell and replacing him with former Fed governor Kevin Warsh. However, Warsh has advised against it, warning of potential financial risks.

- *Potential consequences*: Analysts warn that a forced removal of Powell could trigger market volatility, impacting Treasury and currency markets. The IMF has also expressed concerns, emphasizing that central bank credibility depends on shielding from political interference.

*Key quotes from Powell*:

- "Our independence is a matter of law."

- "We're never going to be influenced by any political pressure."

- "People can say whatever they want, that's fine. But we will do what we do strictly without consideration of political or any other extraneous factors." ²