Trump's Fed Attacks Raise Risks to Economic Stability

President Trump's repeated threats to fire Federal Reserve Chair Jerome Powell have unsettled financial markets, with reported market plunges following his announcements. While Trump has alternately threatened and then walked back his intent to dismiss Powell, experts warn that such political interference undermines the Fed's independence and could trigger both a financial and constitutional crisis. Historically, presidents have pressured the Fed, but its independence is seen as vital for ensuring a resilient financial system and for counterbalancing political tendencies toward excessive spending or tax cuts. Legal experts note that Trump likely lacks the authority to fire Powell outright, and any attempt could provoke a confrontation with the courts. The situation echoes past episodes of political pressure on the Fed, which have sometimes led to negative economic consequences, such as sustained inflation. The ongoing tensions highlight broader concerns about the erosion of institutional norms and the risks posed to market stability.