President Donald Trump warned on Monday that the US economy could slow unless interest rates are lowered immediately, intensifying his ongoing criticism of Federal Reserve Chair Jerome Powell.
Taking to his Truth Social platform, Trump described Powell as a “major loser” and accused him of acting too slowly on monetary policy. “With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late lowers interest rates, NOW,” Trump wrote.
Market jitters and Fed independence concerns
Trump’s latest remarks sent shockwaves through Wall Street, with major US indexes sliding over 1% each on Monday. The Dow Jones Industrial Average fell 449.67 points (1.15%), while the S&P 500 dropped 63.52 points (1.20%). The tech-heavy Nasdaq Composite lost 226.68 points (1.39%).
Investors are growing increasingly uneasy about the implications of Trump’s repeated attacks on Powell. Analysts say this raises questions about the Federal Reserve’s independence, a cornerstone of US financial policy-making.
“The question is whether Powell could get fired. Apparently, Trump doesn’t have the power to do that,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank. “Powell looks like the only one who could counter — and win — against Trump, but the markets could well continue to be the collateral damage.”
The White House is reportedly studying whether it’s legally possible to remove Powell before his term ends in May 2026. White House economic adviser Kevin Hassett recently acknowledged the administration was reviewing its options after Trump expressed frustration over Powell’s leadership.
Powell, however, has stated that the president cannot lawfully fire the Fed chair, and legal experts suggest any attempt to do so would likely face a fierce court challenge.
Trade war woes and market fallout
Trump’s pressure campaign comes amid deepening trade tensions between the U.S. and China. New tariff threats and China’s warning against deals that harm its interests have further rattled investors.
Energy stocks led Monday’s market losses, falling 2.3%, while Tesla plunged 5.2% on reports of a delayed Model Y launch. Nvidia shares also dropped 3.9% after reports that Huawei planned to mass-produce a new AI chip for China.
