Former President Donald Trump recently directed sharp criticism towards Jerome Powell, the Chairman of the Federal Reserve, amid discussions surrounding economic policies and international relations. Trump’s comments come as the European Central Bank (ECB) announced a significant adjustment to its benchmark interest rates, affecting currencies and global markets.
On the international front, Trump focused on what he called “fruitful” discussions conducted with officials from Japan and Mexico. These conversations are a reflection of the Biden Administration’s continued push to fortify trade relationships and tackle supply chain economic worries. His comments shifted to Powell, as if the administration was already unhappy with the Fed’s direction under Powell.
In a social media post, Trump stated, “Too Late= Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’” This flexibility reflects Trump’s view that the Fed has fallen behind an ever-changing economic environment.
At the same time across the Atlantic, the ECB acted boldly by reducing its three key interest rates by 25 basis points a piece. Today the interest rate on the ECB’s main refinancing operations is 2.4%. At the same time, the corresponding rate for the marginal lending facility is at 2.65%. The margin for the deposit facility has been lowered, now set at 2.25%. These adjustments are meant to boost the European economy as a war in Ukraine and energy crises continue to weigh on growth.
Due to these announcements, the EUR/USD pair made some dramatic movements, trading as low as 1.1400. During the Asian session earlier, it registered an intraday high of 1.1409. Technical analysts have noted that the EUR/USD pair is barely holding above a horizontal 20 Simple Moving Average (SMA). At the same time, the 100 and 200 SMAs are still on their bullish slopes, located more than 300 pips underneath the recent price.
Beyond Europe, the implications of ECB’s rate hikes will be felt across global markets, affecting currency exchange rates and overall investor sentiment. Yet the implications of Trump’s attack on Powell are upsetting the ECB’s monetary policy majorities. This new dynamic is sure to stoke fiery economic debates in the days ahead.