In brief
As President Trump escalates his attacks on the Federal Reserve and its chair, Jerome Powell, US stocks and the dollar struggle, fueling fears of an economic downturn.
In a surprising turn of events, US stocks and the dollar faced significant declines as President Trump ramped up his criticism of Jerome Powell, the Federal Reserve Chair. Trump took to social media, declaring Powell a "major loser" for his reluctance to lower interest rates.In his post, Trump urged Powell to act swiftly with pre-emptive cuts to interest rates to support the economy, lamenting that his responses to economic signals have been sluggish. This criticism comes amidst concerns that Trump's own tariff strategies are spurring a stock market sell-off and increasing the chances of a recession. The stock market felt the impact immediately, with the S&P 500 dropping about 3% in early trading on Monday, marking a 12% decline since the year began. The Dow Jones Industrial Average fell 2.9%, down 10% year-to-date, while the Nasdaq saw a staggering 3.4% drop, totaling an 18% fall since January.Even traditionally safe investments like the dollar and US government bonds weren't spared from the chaos; the dollar index hit its lowest point since 2022, while Treasury interest rates climbed as investors sought higher returns on their investments. Trump has long criticized Powell, going so far as to suggest firing him during his first term. The latest outburst from Trump follows Powell’s remarks that the president's tariffs could elevate prices and hamper economic growth. Just last week, Trump tweeted that Powell’s departure “cannot come fast enough,” although such a dismissal would raise questions about the Fed's independence. Powell previously asserted that the president lacks the authority to remove him, but insider reports hint that Trump's advisors may be exploring this drastic option.
