Dimon Says He'd Never Run the Fed But Would Consider the Treasury Role

President Donald Trump has faced criticism from Jamie Dimon, CEO of JPMorgan Chase, over the Justice Department's investigation into Federal Reserve Chair Jerome Powell. Dimon stated that the probe could undermine the Fed's independence, a principle widely supported in the financial community.

In response, Trump defended the investigation, calling Dimon's concerns misguided. He reiterated his intention to replace Powell in the coming weeks and criticized the high interest rates charged by credit card companies, proposing a cap at 10% for a one-year period.

Kevin Hassett, director of the White House National Economic Council, has been considered a top contender to replace Powell. However, Trump has expressed reluctance to move him from his current role, fearing a loss of a key economic communicator.

Why Did This Happen?

Dimon emphasized the importance of the Fed's independence, stating that undermining it could raise inflation expectations and increase interest rates.

Trump's administration has taken a hard stance on the Fed, with recent actions including the DOJ's criminal investigation into Powell's testimony about the renovation of the Fed's headquarters.

How Did Markets React?

The dollar rebounded from session lows following Trump's comments on Hassett, while stocks turned negative.

Treasury Secretary Scott Bessent has reportedly conveyed his concerns about the investigation to Trump, warning that it creates an unnecessary distraction for the central bank.

What Are Analysts Watching Next?

Analysts remain cautious about the potential consequences of these developments. While the immediate market impact has been limited, there are concerns that eroded trust in the Fed's independence could lead to higher long-term interest rates.

Market strategists suggest that the outcomes of these political and legal battles will have broader implications for the economy and financial markets. Investors are advised to remain vigilant as the situation develops.