(CTN News) – On Monday morning, the US stock market continued its descent as Donald Trump escalated his denunciation of Federal Reserve Chair Jerome Powell, whom he labeled “a major loser” for not lowering interest rates.

“The economy may face a deceleration unless Mr. Too Late, a notable failure, promptly lowers interest rates,” declared the president. Recently, Trump’s critique of the Federal Reserve chair has escalated, compelling Powell to lower interest rates to alleviate the inflationary effects of the additional tariffs.

Trump may be pressuring the Federal Reserve to lower interest rates to stabilize the stock market, which has significantly declined following the announcement of his latest tariffs.

However, Wall Street appears to be rejecting Trump’s Powell statements.

The Dow suffered a decrease of 1,000 points, equivalent to 2.8%, on Monday morning. The Nasdaq Composite, heavily impacted by technology, fell by more than 3%, whilst the S&P 500 decreased by 2.9%.

Tesla and Nvidia, formerly considered among the most favored technology stocks, had their share prices fall by more than 5% on Monday. Furthermore, the dollar’s value has declined to multiyear lows relative to most other currencies.

In reaction to Trump’s “liberation day” tariff proposals, which would have imposed significant levies on all of the United States’ trade partners, stock markets rebounded from their declines.

Nonetheless, the stock market has relinquished almost all of its gains following Trump’s announcement of a 90-day postponement of his reciprocal tariffs, which are a direct result of these recent criticisms directed at Powell.

Powell, known for his exact public pronouncements, recently articulated apprehension over Trump’s tariffs, warning that they could create a “difficult situation” for the Federal Reserve. This indicates that the Federal Reserve does not plan to reduce interest rates in the near future.

Tariffs will likely cause a transient increase in inflation. On April 16, Powell informed reporters that the inflationary effects could have a longer lasting impact.

The inflation rate in the United States peaked at 9% in June 2022; however, it has been consistently declining in recent years, mostly attributable to the Federal Reserve’s precise modification of interest rates. The Federal Reserve’s inflation target is 2%.

Powell often addresses the central bank’s “dual mandate,” which entails controlling inflation while concurrently maximizing employment. While elevated interest rates can diminish prices, they may concurrently lead to a rise in unemployment.

Unemployment remains around 4%, while the Fed is reduced.

Notwithstanding the lack of Trump tariffs in the latest governmental figures, inflation fell to 2.4% last month.

Trump has expressed a desire to terminate Powell’s tenure, scheduled to conclude in May 2026, despite the Federal Reserve’s established reputation as a neutral, apolitical institution. “It is essential that Powell be dismissed.” Last week, Trump issued a statement on social media.

Wall Street is expected to incur greater losses due to this atypical action. In a CNBC interview, Krishna Guha, vice-chair of Evercore ISI, an equity research firm, warned that the markets would have a “severe reaction” if Trump dismissed Powell.

“I am astonished that the administration is endeavoring to accomplish that,” Guha conveyed to me today.

Furthermore, it is ambiguous whether Trump possesses the ability to dismiss Powell’s viewpoint. The Supreme Court is presently assessing a lawsuit that may provide President Trump the power to dismiss federal officials before the conclusion of their terms. The impact of this ruling on the Federal Reserve remains ambiguous.

Powell emphasized the importance of the Federal Reserve’s independence from political pressures last week.

Powell asserted, “Our autonomy is a legal issue.” “The law protects us as we are required to fulfill seemingly interminable terms.”

Nonetheless, this does not suggest that the Trump administration is lacking in effort. Kevin Hassett, the White House economic adviser, asserted that the administration will “persist in examining” the legitimacy of Powell’s dismissal, as he suggested during a press conference on Friday.

Federal Reserve officials meet monthly to discuss possible interest rate changes. The upcoming gathering of authorities is set for May 6th and 7th.

SOURCE: TG