Trump’s Potential Firing of Fed Chair Jerome Powell: Impact on US Dollar and Stock Markets
Could Trump Really Sack Jerome Powell?
Speculation is growing over whether former President Donald Trump might remove Federal Reserve Chair Jerome Powell if re-elected — a move that could have dramatic consequences for the US economy, global markets, and the US dollar.
Reports surfaced suggesting Trump had privately informed Republican lawmakers of his intention to fire Powell "soon." Although he later downplayed the idea, he didn't rule it out entirely, stating:
“We’re not planning on doing it… I think it’s highly unlikely, unless he has to leave for fraud.”
Financial Experts Warn of a US Dollar Crash
According to Sean Callow, senior strategist at InTouch Capital Markets, firing Powell could lead to a sharp depreciation of the US dollar, particularly if markets anticipate a less independent, more politically influenced Federal Reserve.
Key forecast highlights:
-
The US Dollar Index could fall by more than 5%
-
Short-term bond yields may drop due to expectations of looser monetary policy
-
Long-term Treasury yields could rise as investors demand a higher risk and inflation premium
“Such a move would be very damaging for the dollar,” Callow stated. “It would signal weakened central bank independence and increase investor uncertainty.”
Stock Market Reaction: Volatility Ahead
Analysts at Wolfe Research — Tobin Marcus and Chutong Zhu — echoed similar concerns. In a recent research note, they warned that removing Powell could unleash widespread financial market volatility.
Possible market consequences:
-
US equities selloff due to shaken investor confidence
-
Surge in long-term interest rates
-
Greater inflation fears and policy instability
“The outcome would be chaotic,” they wrote. “This would be seen as a direct assault on central bank autonomy, and markets would respond accordingly.”
Legal Uncertainty: Can the President Fire the Fed Chair?
A major unknown remains: Can a sitting president legally dismiss the Federal Reserve Chair without cause?
Some experts believe that the issue could be challenged in the courts — possibly even reaching the US Supreme Court. The legal precedent on this matter remains murky, and any political attempt to oust Powell could spark a constitutional battle over Federal Reserve independence.
What This Means for Investors and the Global Economy
If Powell is removed, markets could face:
Long-term implications:
-
Global investors may view the US as a less stable environment for capital
-
The Fed’s perceived independence may suffer lasting damage
-
US borrowing costs could rise if creditworthiness is questioned
Conclusion: A Risky Political Gamble With Global Consequences
While Trump has not confirmed plans to fire Powell, even the speculation has rattled markets. The potential for a 5% dollar slump, a stock market correction, and long-term economic fallout cannot be ignored.
As the 2024 US election approaches, investors should prepare for heightened volatility, especially if central bank independence becomes a campaign issue.
