According to sources, some of Trump’s allies were surprised by the administration’s decision to summon Federal Reserve Chair Jerome Powell. They fear that the legal battle could not only influence Powell’s decision on whether to stay beyond his term but also trigger market instability.
Uncertainty Over Powell’s Future Adds Risk
While Powell’s term as Chair ends in May next year, he can remain a Fed Governor until 2028. He has yet to confirm if he will follow tradition and step down after his term concludes.
Trump’s inner circle is closely monitoring potential fallout, particularly how Wall Street might react. Analysts warn that the move could be seen as a challenge to the Fed’s independence, shaking investor confidence.
Markets May React with Selling Pressure
Some analysts have warned that the situation could trigger a market flight to safety, similar to last year’s trade war tensions. The dollar, bonds, and stocks could all face selling pressure as a result.
- The dollar may weaken
- Bond markets could see volatility
- Equities may face corrections