On April 23, in a move that has sent ripples through financial markets, former President Donald Trump’s public critique of Federal Reserve Chair Jerome Powell has raised alarm over potential attempts to oust the central bank leader. Analysts caution that even if Trump were to succeed in this unprecedented endeavor, the implications for monetary policy may not align with his expectations. Economic expert Paul Ashworth from Capital Economics highlighted that dismissing Powell could initiate a series of actions that might further erode the Fed’s autonomy. He argued that such a scenario would require Trump to remove additional Board members, potentially igniting market instability, depreciating the dollar, and exacerbating the yield curve.
Jerome Powell’s dual role as Chair of both the Federal Reserve and the Federal Open Market Committee (FOMC) places him at the center of critical rate-setting discussions. While traditionally, FOMC members align with the Chair, they may resist any drastic changes imposed by Trump. On social media, Trump branded Powell a “major failed,” a statement that unsettled market confidence. Although White House economic adviser Kevin Hassett indicated discussions on Powell’s potential dismissal were underway, Trump later expressed reservations, stating he has “doubts” about proceeding with such a significant action.