As President Donald Trump intensified his attacks on the head of the US central bank, calling him “a major loser” for not lowering interest rates,
US stocks and the dollar plunged once more. Trump wrote on social media that Federal Reserve Chair Jerome Powell should cut interest rates “pre-emptively” to help the economy.
He said Powell had been too slow to respond to economic changes on a consistent basis.
“The economy can slow down unless Mr. Too Late, a major loser, lowers interest rates, NOW,” he wrote.
Trump’s criticism of Powell’s management of the US economy comes at a time when his own plans for tariffs have caused a sell-off in the stock market and raised concerns about an economic recession. The market turmoil has been exacerbated by the president’s intensifying conflict with Powell, whom he appointed to lead the Fed during his first term. On Monday, the S&P 500, which tracks 500 of the largest US companies, lost about 2.4%. Since the start of the year, it has lost approximately 12 percent of its value. The Nasdaq has fallen more than 2.3 percent and is down approximately 18% since January, while the Dow Jones Industrial Average has lost 2.4 percent and has lost approximately 10 percent so far this year.
In times of market turmoil, the dollar and US government bonds are typically regarded as safe investments; however, they have not escaped the recent turmoil. Monday marked the lowest level of the dollar index, which measures the strength of the dollar against a group of currencies, including the Euro.
As investors demanded higher returns for holding Treasuries, interest rates on US government debt also increased. On Tuesday morning, the majority of major stock indexes saw little activity.
In Sydney, the ASX 200 and Nikkei 225 in Japan were about 1% lower. The Hang Seng in Hong Kong was down about 0.5 percent. As investors look for so-called “safe-haven” assets, the price of gold reached a new record high.
Monday marked the first time that spot gold crossed the $3,400 (£2,563) per ounce mark. During times of economic uncertainty, the precious metal is regarded as a safer investment option. Powell has been criticized by Trump since his first term, when he also reportedly discussed firing him. He has urged Powell to lower borrowing costs since he won the election.
Following Powell’s warnings that Trump’s import taxes were likely to raise prices and slow the economy, the most recent criticism follows. “Powell’s termination cannot come fast enough,” Trump wrote on social media on Thursday, calling for Powell’s dismissal publicly last week.
Given the bank’s long history of independence, such a move would be controversial and legally ambiguous. Last year, Powell told reporters that he didn’t think the president could remove him legally.
