In one of the most tense moments in the relationship between the executive branch and U.S. monetary policy, the spark of confrontation has reignited between former President and current presidential candidate Donald Trump and Federal Reserve Chairman Jerome Powell, as the date of the Federal Reserve meeting approaches in late July.
💣 Background of the clash: High interest... and fiery criticisms
Since the beginning of his campaign, Trump has positioned high interest rates as one of his main economic foes, arguing that they hinder growth, hurt the middle class, and thwart America’s industrial competitiveness. However, in recent weeks, his tone has escalated significantly, as he publicly described Powell as "dull" and "suffocating the economy," demanding a reduction in interest rates to below 1% immediately!
On the other hand, Powell remains committed to the cautious Fed line, emphasizing that any decision to lower interest rates must be based on real economic data, not political pressures, especially in light of inflation indicators that are still below ideal levels.
🧭 Why is this conflict important for the markets?
In a global environment where decisions are priced according to the tone of the U.S. Federal Reserve, any change in interest rate directions directly impacts:
Stock and bond markets
Investor trends towards digital currencies (like Bitcoin and Ethereum)
The strength of the U.S. dollar against other currencies
As expectations for an imminent cut recede, investors have begun to rearrange their portfolios in light of the potential change in Fed leadership if Trump returns to the White House in 2025.
👥 Is there a division within the Fed?
Yes. One of the most prominent voices supporting Trump's direction is Federal Reserve Board member Christopher Waller, who recently called for a gradual reduction starting from the July meeting. This statement was considered a "subtle flirtation" with the conservative political stream, raising a debate about the independence of the central bank.
🧨 Trump threatens impeachment... Will Powell be impeached?
Although U.S. law does not grant the president the authority to dismiss the Fed chairman without legal cause, Trump has explicitly hinted at "leadership change" should he win, proposing alternative names more aligned with his economic vision.
This point is likely to become a major pressure point in his upcoming campaign, especially with rising mortgage financing costs and a slowing housing market.
🔮 What does this mean for cryptocurrency traders?
The upcoming scene carries direct implications for the crypto market:
Any interest rate cut will lead to a weaker dollar and a potential rise in Bitcoin and digital currencies as alternative hedging assets.
The political tension surrounding the Fed may enhance the narrative of cryptocurrencies as an alternative to traditional centralized systems.
✍️ Summary:
As the U.S. economy experiences a complex mix of slowdown and inflationary pressures, the "Trump – Powell" battle has become more than just a political disagreement; it is a battle for the future of U.S. monetary policy. And the markets, as usual, do not like surprises.
👀 Watch the Federal Reserve meeting at the end of July, as it may serve as a pivotal turning point in shaping the economy – and digital markets – for the coming months.