Trump goes to war with the US Federal Reserve: a ‘recipe for disaster’?

Donald Trump’s simmering discontent with the US Federal Reserve boiled over this week, with the president threatening to take the unprecedented step of ousting the head of the fiercely independent central bank. Trump has repeatedly said he wants rate cuts now to help stimulate economic growth as he rolls out his tariff plans, and has threatened to fire Fed Chair Jerome Powell if he does not comply, putting the bank and the White House on a collision course that analysts warn could destabilise US financial markets. “If I want him out, he’ll be out of there real fast, believe me,” Trump said on Thursday, referring to Powell, whose second four-year stint as Fed chair ends in May 2026.

Powell has said he has no plans to step down early, adding this week that he considers the bank’s independence over monetary policy to be a “matter of law”. “Clearly, the fact that the Fed chairman feels that he has to address it means that they are serious,” said KPMG chief economist Diane Swonk, referring to the White House. Stephanie Roth, chief economist at Wolfe Research, said she thought “they will come into conflict”, but did not think “that the Fed is going to succumb to the political pressure”.



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