The shares turned wild on Wednesday after US President Trump first told Republican legislators to fire the chairman of the Jerome Powell federal reserve system, and then publicly turned the course a few hours later.
At Tuesday’s Oval Office, Trump showed a proposal for a fire letter to the legislators and addressed them about Obb Powell and received enthusiastic support.
The reports launched a 0.8% dollar drop and immersion of shares on the Wednesday Open. But the markets recovered when Trump told journalists, “We don’t plan anything … I think it’s very unlikely” unless Powell has committed fraud.
S&P 500 deleted losses to close 0.3%while the dollar gained half a drop.
Fed Independence Fears evokes alarm bells
Experts warned that Powell’s shooting would destroy markets and undermined US financial credibility. Deutsche Bank predicted the immediate 3-4% of the document accident and market chaos of bonds, noticing the independence of the Fed is the “highlight of the global dollar system”.
The Republican Senator John Kennedy warned: “You would see a stock and bond crash”. The Supreme Court ruled that the presidents did not have the power to fire Fed officials without a “cause”, such as misconduct, not political disputes.
Powell insists that it will serve until 2026 and calls Trump’s threat legally invalid.
The Renovation Scandal becomes an excuse by the burn
The White House examines the reconstruction of a $ 2.5 billion building to justify the removal of Powell. Trump claimed that exceeding costs could be a “fraud”, which is a potential “cause” for release.
Fed officials accuse inflation and unforeseen problems such as asbestos for budget hikes. Meanwhile, Trump’s allies launched a coordinated attack: Russell’s budget director Vought accused Powella of “violation of the law”, while business advisor Peter Navarro called him “among the worst chairs”.
The aim of this effort is to push Powell to a lowering rate that Trump requires to strengthen the US economy.
Powell refuses to reduce interest rates despite Trump’s pressure on the dramatic 3-point cuts, to argue that tariffs could worsen inflation.
With US inflation to 2.4% and new tariffs up to 40% that appear on August 1, analysts warn premature cuts that could fail. Powell’s fate remains uncertain, but Wednesday’s jump shows that Wall Street still believes the independence of the Fed, at least for now.
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