U.S. financial markets were rocked once again as President Donald Trump escalated his public criticism of Federal Reserve Chair Jerome Powell, branding him “a major loser” over the central bank’s decision not to cut interest rates. The president demanded that Powell take immediate action to lower borrowing costs in a bid to stimulate the American economy.
Using social media as his platform, Trump urged Powell to slash interest rates “pre-emptively,” accusing the Fed chair of being too slow to react to the evolving economic landscape. “There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” the president declared in his online post.
Trump’s latest remarks come amid growing concern that his own economic policies—particularly aggressive tariffs—have contributed to market instability and increased the risk of a recession. His ongoing feud with Powell, whom he appointed during his first term in office, has only deepened the market unease.
As a result of the heightened tensions and economic anxiety, U.S. stock indexes suffered steep losses. The S&P 500, a barometer of 500 of America’s most significant companies, dropped by approximately 2.4% on Monday. Since the beginning of the year, the index has declined by around 12%. The Dow Jones Industrial Average mirrored that performance, also falling 2.4% and registering a year-to-date loss of roughly 10%. Meanwhile, the tech-heavy Nasdaq fared even worse, shedding more than 2.5% and posting a staggering 18% decline since January.
The market jitters weren’t confined to the U.S. On Tuesday, trading remained subdued in most Asia-Pacific markets. Japan’s Nikkei 225 closed slightly lower by about 0.1%, and Australia’s ASX 200 declined by roughly 0.3%. In contrast, Hong Kong’s Hang Seng Index managed a modest gain of about 0.3%.
European markets also reflected the global unease. In early trading, the UK’s FTSE 100 edged down by about 0.05%, while Germany’s DAX index fell by 0.5%. France’s CAC 40 registered a more pronounced drop of 0.6%.
Ordinarily, the U.S. dollar and government bonds are viewed as safe havens during market turmoil. However, even these assets have come under pressure. The dollar index, which gauges the greenback’s strength against a basket of currencies including the euro, fell on Monday to its lowest point since 2022.
In another sign of market unrest, yields on U.S. government bonds climbed on Tuesday, indicating that investors are demanding higher returns to hold onto Treasuries. This trend reflects a lack of confidence in the near-term stability of the U.S. economy.
At the same time, gold prices soared to a record high, breaching the $3,500 per ounce threshold. The surge in the precious metal’s value signals investors’ preference for assets deemed more secure amid uncertain times. Gold is traditionally seen as a safe haven when economic conditions become volatile.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, pointed to multiple global factors boosting gold’s appeal. “No long-term resolution [is] in sight for conflicts around the world, particularly in Ukraine and Gaza,” she noted. “There are also concerns about the risk that geo-political tensions escalate as opportunities in the Arctic are eyed by the US and Russia,” she added.
Meanwhile, tensions are not just limited to economic policies and markets. On the global diplomatic front, China has issued a warning to other nations, urging them not to “appease” the U.S. in trade negotiations. The comments come amid increasing skepticism of American leadership in global economic matters.
Despite the heightened uncertainty, the International Monetary Fund (IMF) recently stated that a global recession remains unlikely, even with the pressures stemming from U.S. tariffs. However, the IMF also warned that its upcoming country-by-country growth forecasts would include “notable markdowns.”
President Trump’s criticisms of Powell are not new. Throughout his first term, he repeatedly expressed dissatisfaction with Powell’s approach to interest rates and even reportedly considered firing him. Following his return to office, Trump has continued to pressure Powell to cut borrowing costs.
This latest attack followed Powell’s remarks cautioning that Trump’s tariff policies could contribute to inflation and impede economic growth. Trump ramped up his criticism last Thursday by publicly calling for Powell’s removal. “Powell’s termination cannot come fast enough,” he wrote on social media.
The idea of dismissing the Fed chair is controversial and could face significant legal hurdles. The Federal Reserve has traditionally operated with a high degree of independence to insulate it from short-term political influence. Powell has previously told reporters that he does not believe the president possesses the legal authority to fire him.
Still, the Trump administration appears to be exploring options. One of Trump’s top economic advisers confirmed that discussions about removing Powell were underway, noting this on Friday—a day when the U.S. stock market was closed.
These developments coincide with the spring meetings of the International Monetary Fund and the World Bank, where top financial policymakers have gathered in Washington. The heightened political pressure on the Fed has become a central topic of concern at the gatherings.
Christopher Meissner, an economics professor at the University of California, Davis, and a former IMF employee, explained to the BBC’s Today programme that political interference in central banking was more common in the past. “However, the past 30 or 40 years what we’ve learned is that central bank independence is the key to financial stability and low inflation. And I think this is a major reversal and we have to watch out for it,” he warned.
Streeter echoed this view, emphasizing the importance of insulating monetary policymakers from political influence. “The independence of central banks is seen as critical to ensure long-term price stability, ringfencing policymakers from short-term political pressures,” she said.
Looking ahead, the IMF will release its latest economic projections shortly. These forecasts are expected to reflect growing concerns about U.S. economic performance and its potential ripple effects worldwide. “They used to say ‘When the US sneezed, the rest of the world caught a cold’. It’ll be really curious to see if that continues,” said Meissner. “However, I think people are expecting a pretty significant downturn in the US in the coming months… and that can’t be good for the rest of the world.”
Streeter noted that Trump’s policy decisions have undermined the global perception of the U.S. as a stable economic leader. “Yields on 10-year US Treasuries have held onto their recent rise above 4.4%. It’s another sign of unease about the direction of the US economy, amid worries that policies playing out could keep inflation higher and slow growth, and flags the anxiety rattling through the markets right now,” she said.