US financial markets faced renewed volatility as former President Donald Trump intensified his criticism of Federal Reserve Chairman Jerome Powell, calling him “a major loser” for allegedly failing to act swiftly to reduce interest rates.
In a social media post, Trump lambasted Powell’s reluctance to implement pre-emptive rate cuts, accusing the central bank chief of being chronically slow in responding to economic developments.
“There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump wrote online.
This latest confrontation comes amid rising market anxiety sparked by Trump’s own economic policies, including the imposition of new tariffs, which have fueled fears of a looming recession and sparked a widespread sell-off across US stock markets.
Trump, who appointed Powell to head the Fed during his first term in office, has increasingly turned his criticism toward the central bank as market indicators trend downward.
The S&P 500, which tracks the performance of 500 large-cap American companies, slumped by roughly 2.4% on Monday, bringing its year-to-date decline to around 12%. The Dow Jones Industrial Average also fell by 2.4%, while the Nasdaq dropped more than 2.5%, now down about 18% since the start of the year.
Global markets also showed mixed reactions. In Asia-Pacific trading on Tuesday, Japan’s Nikkei 225 edged down by 0.1%, Australia’s ASX 200 shed around 0.3%, and Hong Kong’s Hang Seng Index rose marginally by 0.3%.
Early European market movements mirrored the uncertainty. The UK’s FTSE 100 dipped slightly by 0.05%, while Germany’s DAX and France’s CAC lost about 0.5% and 0.6%, respectively.
Typically viewed as a safe haven in times of market stress, both the US dollar and government bonds were caught in the ongoing turbulence. The dollar index—measuring the dollar’s strength against a basket of major currencies—fell on Monday to its lowest level since 2022.
In contrast, yields on US Treasury bonds continued their upward climb on Tuesday, as investors demanded higher returns in exchange for perceived risks.
Gold prices surged to a new all-time high, breaking through the $3,500 per ounce threshold. Investors have turned to the precious metal as a traditional hedge against economic instability.
Trump’s animosity toward Powell is not new. During his presidency, Trump reportedly explored the legal feasibility of removing Powell from office. His recent remarks included a public call for Powell’s immediate dismissal, stating on social media last Thursday, “Powell’s termination cannot come fast enough.”
Such a move would be highly contentious and legally ambiguous, as the Federal Reserve has long maintained its independence from political interference. Powell himself stated last year that he did not believe the president possessed the legal authority to remove him.
However, one of Trump’s top economic advisers confirmed on Friday that the administration was actively evaluating the possibility, even as US markets remained closed for the holiday.
The timing of Trump’s comments is particularly notable, as global economic leaders convene in Washington this week for the spring meetings of the International Monetary Fund (IMF) and the World Bank.
Christopher Meissner, an economics professor at the University of California, Davis, and a former IMF advisor, told the BBC that while political interference in central banking was not uncommon in earlier decades, recent history underscores the importance of monetary policy independence.
“In the past 30 to 40 years, we’ve learned that central bank independence is vital for ensuring price stability and financial calm,” Meissner said. “This kind of political pressure is a major reversal we must be cautious of.”
Susannah Streeter, an analyst at Hargreaves Lansdown, echoed these concerns, stating, “The independence of central banks is essential to shield policymakers from short-term political agendas and ensure long-term economic health.”
The IMF is set to release its latest economic growth projections for individual countries later this week. Officials have already warned that the update will include several “notable markdowns.”
Meissner added, “They used to say, ‘When the US sneezes, the rest of the world catches a cold.’ We’ll see if that still holds. But expectations are high for a significant economic downturn in the US, which could have global repercussions.”
Streeter concluded that Trump’s economic policies have damaged perceptions of the US as a reliable economic anchor.
“The yield on 10-year Treasuries remains above 4.4%, a clear indicator of growing concern over the economic direction,” she noted. “The worry is that current policies could sustain high inflation and further stall economic growth, fueling the market’s deepening anxiety.”
