Trump Threatens Powell's Removal Over Rate Disagreement

President Trump has continued his criticism of Federal Reserve Chair Jerome Powell, reiterating his desire for lower interest rates and labeling Powell as “a major loser” in a recent post on Truth Social. This is not the first time Trump has expressed his dissatisfaction with the Fed's leadership, but he is the only sitting president in modern history to publicly threaten to fire the chair.

Previous presidents, such as Joe Biden and Barack Obama, have also expressed frustration with the Fed's progress on inflation. However, they have both emphasized their respect for the central bank’s independence. The question of whether the president has the authority to remove a sitting Fed chair remains unclear, but Trump's actions suggest that he may act unilaterally if he chooses to do so.

ECB President Christine Lagarde has also weighed in on the matter, expressing her hope that the Fed maintains its independence. When asked about the potential impact of firing Powell, Lagarde declined to speculate, stating that she hopes such a scenario is not on the table.

Some argue that growing tensions between the Fed and the executive branch could boost the price of bitcoin. However, the Fed's independence is a key stabilizing factor of the economy, and removing this would likely damage risk assets. For now, bitcoin still trades like a risk asset, and any potential boost from political tensions remains speculative.