Donald Trump’s scathing attack on Federal Reserve Chair Jerome Powell triggered fresh market turmoil overnight, with Wall Street suffering one of its sharpest drops this year. Mr Trump accused Mr Powell of failing to cut interest rates despite falling energy and food prices, branding him “Mr Too Late” and a “major loser”.
In a typically blunt post on Truth Social, he said: “There is virtually No Inflation,” and warned the economy could stall unless the Fed acts ‘NOW’.” The former President also claimed the Fed cut rates ahead of the last election to help “Sleepy Joe Biden” and Vice-President Kamala Harris win—a claim economists say lacks evidence. His remarks appeared to rattle investors, fuelling fears of renewed political pressure on the central bank.
The Dow Jones Industrial Average slumped more than 1,000 points, while the S&P 500 fell 2.8% and the Nasdaq dropped 3.2%. The dollar also tumbled to a three-year low.
Chicago Fed President Austan Goolsbee resisted the political heat, warning that interference could damage the central bank’s independence and worsen inflation.
The Fed has been signalling caution, insisting it will not cut until inflation comes down further. If implemented, Mr Trump’s proposed global tariffs are also likely to push prices higher, complicating the picture even more.
The renewed pressure has left traders on edge, with safe-haven assets like gold soaring and confidence in U.S. financial stability taking a fresh hit.