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Stock Market Declines as Trump Criticizes Fed Chair Powell Over Interest Rate Policy
U.S. equity markets commenced a downward trend on Monday morning, triggered by ongoing criticism from Donald Trump directed at Federal Reserve Chairman Jerome Powell. Trump labeled Powell a “major loser” for allegedly failing to implement interest rate reductions.
President Trump’s Renewed Attacks on Jerome Powell
Accusations of Economic Slowdown and Calls for Rate Cuts
“Economic deceleration is a distinct possibility unless Mr. Too Late, an egregious failure, lowers interest rates, IMMEDIATELY,” Trump proclaimed via social media.
Trump has intensified his censure of the Federal Reserve head in recent days, urging Powell to decrease interest rates to mitigate the inflationary consequences of recently imposed tariffs.
Wall Street Reacts Negatively to Trump’s Fed Criticism
Significant Drop in Major Stock Indices
Wall Street seemingly expressed apprehension regarding these fresh pronouncements, as U.S. stocks initiated a sharp decline upon the news. The Dow Jones Industrial Average experienced a precipitous fall of 1,000 points, representing a 2.8% decrease. Simultaneously, the technology-heavy Nasdaq Composite registered a decline exceeding 3%, and the S&P 500 Index dropped by 2.9%.
Stock markets previously rebounded from losses incurred following Trump’s unveiling of tariff proposals, then termed “liberation day,” which threatened substantial levies on all U.S. trading partners. However, the majority of the gains achieved subsequent to Trump’s announcement of a 90-day pause on reciprocal tariffs have been negated amidst this renewed barrage of criticism directed at Powell.
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Federal Reserve’s Stance on Tariffs and Inflation
Powell’s Warnings and Defense of Central Bank Independence
Powell, recognized for his typically cautious public statements, has recently addressed Trump’s tariffs, cautioning that they could engender a “challenging scenario” for the Fed, implying no imminent plans for interest rate reductions.
“Tariffs are highly likely to provoke at least a temporary surge in inflation. Furthermore, the inflationary repercussions could exhibit greater persistence,” Powell stated to reporters on April 16th.
The Federal Reserve has historically operated as an impartial and apolitical federal entity. Despite this tradition, Trump has recently alluded to the possibility of dismissing Powell, whose term is scheduled to conclude in May 2026. “Powell’s dismissal cannot occur rapidly enough!” Trump conveyed via social media last week.
Potential for Unprecedented Action: Trump and Powell’s Future
Such an action would be unprecedented and likely precipitate further market instability. In a CNBC interview, Krishna Guha, Vice Chairman of Evercore ISI, an equity research firm, posited that a “severe reaction” from markets would ensue if Trump were to remove Powell from his position.
“I find it implausible that such an outcome is the administration’s objective,” Guha remarked.
The extent of presidential authority to remove Powell remains ambiguous. The Supreme Court is currently deliberating a case that could potentially expand presidential power to terminate federal officials prematurely, although its applicability to the Federal Reserve remains uncertain.
Powell underscored the significance of the Fed’s autonomy from political pressures last week.
“Our independence is legally enshrined,” Powell asserted. “We are appointed to lengthy, effectively indefinite terms, thereby affording us legal protection.”