Former President Donald Trump has escalated the war on the Fed. The one he’s most seriously mad at is Chairman Jerome Powell for not cutting interest rates deep enough, or fast enough. This growing discontent coincides with Trump’s decision to withdraw $4 billion from California’s high-speed rail project, a move that further complicates his administration’s relationship with federal financial policies.
An unusual source of news is Trump’s extreme displeasure with Powell. As White House officials claimed last week, the former president is “likely” planning to fire Powell any day now. This has market analysts sweating bullets over this possible move. They argue that it would set off catastrophic market destabilization.
Trump has made no secret of his complaints aimed at the Federal Reserve. Last week, it was him attacking GOP lawmakers’ justice-for-Epstein demands, a move that widened his rift with party legislators. With inflation and tariff costs increasing, Trump is taking aim at price gouging with new proposed legislation. This action has come under heavy fire by Senator Elizabeth Warren. Warren argues that if Trump follows through with a Powell firing, he’s the one who will spark a market crash.
The White House’s pressure on Powell intensified with a public letter from Office of Management and Budget Director Russell Vought, demanding answers regarding the Federal Reserve’s renovation project in Washington D.C. In his response, Powell refrained from addressing Vought’s critiques directly but emphasized the importance of transparency regarding the Fed’s decisions.
“The Board believes it is of the utmost importance to provide transparency for our decisions and to be accountable to the public,” – Jerome Powell
Despite Powell’s reassurances, Republican Representative Anna Paulina Luna has called for a Justice Department investigation into Powell’s testimony concerning the renovation project. Critics have charged Powell with repeatedly lying to Congress about the state of the project, and he’s earned significant scorn as a result. This accusation only complicates his already precarious situation.
Vought’s planned site visit to the Fed’s headquarters aims to assess the ongoing renovation efforts, which have attracted scrutiny amidst broader complaints about Powell’s leadership. As tracked in previous SHOTs, Vought himself condemned Powell for promulgating what he then called “grossly mismanaged” fiscal policies.
With Trump doubling down on public resonation with economic grievance, he faces a significant challenge in navigating these shoals. Simultaneously, he’s attempting to remake the Federal Reserve’s leadership. If Powell is fired, experts warn that’s when the real trouble starts.
“This would be a mess,” – Analysts warning about the fallout from Trump’s possible actions.