Trump’s Threat to Fire Fed Chair Raises Dollar Credibility Concerns
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Firing the Fed Chair could destabilize markets and hurt Fed independence. Trump’s move to fire the Fed Chair may erode global trust in the U.S. dollar. Political pressure to fire the Fed Chair risks long-term economic consequences. French Finance Minister Eric Lombard has strongly warned against the latest threats from U.S. President Donald Trump to sack Federal Reserve Chair Jerome Powell, saying it would potentially significantly erode the credibility of the U.S. dollar and destabilize the wider economy. Risks of Firing the Fed Chair In an interview with La Tribune Dimanche, Lombard stated Trump’s aggressive tariff policies have already undermined global confidence in the dollar, and the removal of Powell would further destabilize the bond market. “Increased debt servicing costs and deep economic disorganization” are likely outcomes, he stated. Trump’s frustrations with Powell’s reluctance to cut rates spilled over on social media last Thursday, when he tweeted that Powell’s “termination couldn’t come quickly enough.” It is not clear whether Trump plans to oust him before his term expires in May 2026 or simply wants a change in leadership. As the U.S. National Economic Council is said to be weighing Trump’s legal avenues, French officials are increasingly denouncing Trump’s economic policies. Lombard’s bluntly honest remarks follow increased tensions over trade and an unclear world economic environment. Tariffs, Trade Wars, and the Bigger Picture Lombard also criticized Trump’s 10% tariffs on EU imports as “unsustainable for the U.S. economy” and harmful to global trade stability. He added that Europe’s goal is to create an actual free-trade zone with the U.S., not practice mutual protectionism. The warning comes in line with wider caution from the International Monetary Fund (IMF) which will downgrade growth forecasts this year. IMF Managing Director Kristalina Georgieva observed rising financial risks due to uncertainty, inflation, and fragmented trade relations.…
Filed under: News - @ April 21, 2025 4:11 am