Changing course will be difficult to recover! GlobalData economist: Trump's off-the-wall remarks have clearly damaged the independence of the Federal Reserve.

Despite U.S. President Trump's continuous pressure on Federal Reserve Chairman Powell last week and his change of stance this week by saying he has "no intention of firing Powell" and calming the markets, economist Dario Perkins of GlobalData TS Lombard stated that Trump's "outrageous comments" have clearly undermined the Federal Reserve's independence. Trump had repeatedly urged the Fed to cut interest rates last week and even suggested that Powell could be removed immediately. White House National Economic Council Director Kevin Hassett confirmed last week that Trump and his team were exploring the possibility of firing Powell. The conflict between Trump and Powell highlights the deep divisions between the U.S. government and the central bank on monetary policy, raising widespread concerns about the erosion of the Fed's independence and putting pressure on U.S. assets as a result. Perhaps frightened by the steep market drop, Trump quickly changed his tune, stating that he has no intention of firing Powell, even though he was disappointed that the Fed did not cut rates faster. Trump told reporters on Tuesday, "I never fired anyone (intended to fire Powell). The media always messes things up. I just hope to see him be a bit more aggressive in his thinking about lowering rates." Dario Perkins said, "Even though Trump currently insists that Powell is the Fed chair, his outrageous comments have clearly damaged the Fed's independence. Yes, it's a highly respected job, but given Trump's behavior, how can we not doubt the person appointed to this position in 2026?" He added, "Trump clearly wants to shape monetary policy through proxies. History praises central bank governors who face political pressure rather than surrender to it. Anyone who understands this point will certainly have significant reservations about accepting this job." The independence of the Federal Reserve has long been considered a key factor in maintaining macroeconomic stability. However, whenever political forces attempt to intervene in central bank policy, it often leads to uncontrolled inflation or damaged market confidence. Former Fed Chairman Ben Bernanke warned, "Political interference in monetary policy may create adverse boom-bust cycles, leading to economic instability and rising inflation." Perkins said, "While we can discuss the advantages of central bank independence, the broader background is that the reckless behavior of this U.S. government has shocked global investors." "Now there is widespread doubt about the decision-making ability of the U.S. government, and weakening the Fed's independence will only make things worse. An orderly withdrawal of U.S. assets could evolve into even more disastrous scenarios, such as a complete fire sale of U.S. assets."