Sen. Elizabeth Warren of Massachusetts warned Thursday that the stock market might “crash” if President Trump tries to fire Federal Reserve Chair Jerome Powell.
Ms. Warren, a Democrat, said the independence of the Fed sends a critical “signal” to the global financial community that someone in the U.S. is filtering through economic data and making decisions outside of politics.
The senator, speaking on CNBC, said she disagrees with Mr. Powell a lot.
“But the independence itself is a value. It’s a value to the United States and some value to our markets,” Ms. Warren said. “If Donald Trump destroys that, then he brings down those markets. He burns something of value to the United States.”
And if the president pushes Powell out?
“I think they crash,” Ms. Warren said of the stock and bond markets and dollar value.
Mr. Trump is upset that Mr. Powell and the Fed haven’t slashed interest rates despite relatively mild inflation.
The president is attacking the chair relentlessly and questioned whether there is “fraud” inside a renovation project at the Fed building in Washington, though he downplayed talk of firing him.
“No, I’m not talking about that. Fortunately we get to make a change in the next eight months or so,” Mr. Trump said Wednesday. “I haven’t drafted a [resignation] letter.”
Mr. Powell says inflation is moderating but remains above the Fed target of 2%. He says he’s ignoring Mr. Trump’s attacks and remains focused on the Fed’s goals of maximum employment and stable prices.
The chair also said the Fed likely would have cut interest rates except for the uncertainty around Mr. Trump’s tariffs, which could raise prices.
The president’s trade agenda has gone through a number of fits and starts, though he’s assigning new tariff rates on Aug. 1 unless countries offer better terms.
Still, he believes the Fed should have acted by now to offer better terms to borrowers.
“LOWER THE RATE!!!” Mr. Trump wrote on Truth Social Thursday, his latest broadside against Mr. Powell.
The chairman, whose term ends in May, says Mr. Trump is not permitted to fire him under the law.
Mr. Trump is mulling ways to do it, however. He recently asked Republican lawmakers whether he should fire Mr. Powell, and they said yes.
