- Trump Criticizes Powell, Warns of Economic Recession Unless Interest Rates Are Cut
- Experts Predict Fed Will Cut Rates Multiple Times This Year, Despite Powell's Opposition
On April 21, President Donald Trump intensified his criticism of Federal Reserve Chairman Jerome Powell, calling him a "big loser" and warning about a potential economic downturn.
Trump Criticizes Powell
In a post on Truth Social, Trump emphasized that if Powell does not quickly reduce interest rates, the US economy could face a recession.
He argued that with declining prices, inflation seems unlikely, but a recession could be imminent if the Federal Reserve does not adjust its policy.
Trump said,
"With these costs trending down beautifully as I predicted, there could be almost no inflation, but the economy could SLOW DOWN unless Mr. Too Late, a big loser, cuts rates, RIGHT NOW."
Impact on US Stocks and Cryptocurrencies
Following Trump's statement, the US stock market closed in red, with S&P 500 dropping 2.4%, Nasdaq falling 2.5%, and Dow Jones losing nearly 1,000 points, down 2.5%.
This marks a significant decline, with S&P 500 now down over 12% YTD and Nasdaq dropping nearly 18% amid a retreat from tech stocks.
Meanwhile, the cryptocurrency market remained strong, maintaining a total market capitalization of $2.83 trillion.
Bitcoin [BTC] was the primary market support, reaching a four-week high of $88,500 on April 22.
Although the global cryptocurrency market capitalization slightly decreased to $2.75 trillion, Bitcoin showed strength, trading at $88,175 after increasing 0.75% in the past 24 hours, according to CoinMarketCap.
The Crypto Fear and Greed Index previously touched 31, reflecting strong market fear, a sentiment that has persisted since February.
However, according to the latest update, the index is now at 47, indicating a shift towards a neutral market sentiment.
Can Trump Fire Powell?
Trump's recent attacks on Jerome Powell, whom he appointed during his first term, have raised speculation about the president's legal ability to remove the Federal Reserve Chairman before his term ends in May 2026.
Powell affirmed that the president cannot fire him under current law.
If Trump were to take such action, this could lead to a severe sell-off in US stock markets, according to Krishna Guha, Vice Chairman of Evercore ISI, who said on "Squawk Box":
"If you start questioning the independence of the Federal Reserve, you're raising the bar for the Federal Reserve to cut."
He added,
"If you actually try to remove the Federal Reserve chairman, I think you would see a severe market reaction with higher yields, lower USD, and stock price declines."
Despite Powell's rejection of Trump's request to cut rates, many experts believe the Fed will still implement multiple rate cuts this year.
For example, Citigroup predicts a rate cut in June and expects a total of 125 basis points to be cut by the end of 2025.
