US stocks and the dollar plunged once more as President Donald Trump ramped up his criticism of US central bank chief, Jerome Powell, referring to him as “a major loser” for not cutting interest rates. Trump, in a tweet, summoned Federal Reserve chairman Jerome Powell to cut interest rates “pre-emptively” to support the economy, asserting Powell had been too slow consistently to respond to economic news.
Market Struggles as Donald Trump Intensifies Attacks on Powell
“There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump wrote. His escalating battle with Powell, whom he appointed to head the Fed in his first term, contributed to the market upheaval. The S&P 500, which measures 500 of the largest US firms, dropped about 2.4% on Monday. It has declined about 12% since the beginning of the year. The Dow Jones Industrial Average fell 2.5% and has fallen around 10% this year to date, while the Nasdaq declined over 2.5% and is down around 18% since January.
Dollar and US Bonds Show Volatility
While the Dollar and US government bonds are generally regarded as safe havens during market instability, they too have not been immune to the recent volatility. The dollar index that gauges the strength of the dollar compared to a basket of currencies, including the Euro, on Monday dipped to its weakest level since 2022. US government debt interest rates also increased, as investors required greater returns to own Treasuries.
Ongoing Conflict of Donald Trump with Powell
Trump’s attacks on Powell have been ongoing since his initial term of office when he also allegedly threatened to fire him. Since the election victory, Trump has pressed Powell to cut borrowing costs. The most recent criticism follows Powell’s warnings that Trump’s import tariffs were likely to accelerate inflation and hit the economy. Last week, Trump publicly urged Powell’s removal, tweeting, “Powell’s firing cannot come soon enough.”
