Trump Turns Up the Heat: Demands Powell Slash Rates As Recession Fears Mount

Former US President Donald Trump has again attacked Federal Reserve Chairman Jerome Powell, threatening an economic slowdown unless the Fed cuts interest rates. In a Truth Social post, Trump wrote, 

"Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation. There can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW." 

His comments came amid intensifying market uncertainty and increasing fears about central bank autonomy.

Markets Respond Quickly To Trump's Remarks

Wall Street reacted negatively, with all major indexes declining more than 1% on Monday. Investors were shaken not only by Trump's renewed attacks but also by fears about the Fed's independence, as reported by Reuters. Analysts said that the ongoing pressure from Trump has put a shadow over the Fed's capacity to control monetary policy independently.
 

“Whether or not Powell can be fired is the question. Trump apparently can't do that. Powell appears to be the sole one who would be able to counter — and win against — Trump, but the markets could well remain the collateral damage," said Ipek Ozkardeskaya, Swissquote Bank senior market analyst. 

Powell: Legal Uncertainty At White House

A case now before the U.S. Supreme Court could decide whether Trump might be able to remove Powell from office. In the meantime, White House economic adviser Kevin Hassett indicated Trump's staff would investigate whether dismissing the Fed chair was legally feasible, further fueling tensions.

ALSO READ: Global Shockwave: U.S. Dollar Crash Sparks Worldwide Economic Tremors

U.S.-China Trade War:  Market Concern

Investor confidence has also been affected by uncertainty regarding U.S.–China trade relations. China recently issued a warning against any agreement that could come at Beijing's cost, further exacerbating the tariff tensions. Fed policymakers have also used these uncertainties as reasons for a dovish rate outlook.

Traders now anticipate as much as 90 basis points of Fed rate cuts this year, based on LSEG data. With earnings season beginning, everyone is waiting for tech giants such as Tesla and Alphabet to give clues about how businesses are faring in this turbulent economic environment.