US stock markets fell sharply on Monday as President Donald Trump escalated his criticism of Federal Reserve Chair Jerome Powell. Trump called Powell “a major loser” for not lowering interest rates. The Dow Jones Industrial Average ended the day down 2.5%, while the tech-heavy Nasdaq Composite fell over 2.5%.
The S&P 500 also dropped 2.4%. Former tech stock favorites like Tesla and Nvidia lost ground. Trump has intensified his push for Powell to lower rates to offset the impact of his tariffs.
He wrote on social media, “There can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.”
However, Wall Street appears to be reacting negatively to Trump’s attacks on the Fed’s independence. Markets had previously recovered from losses after Trump’s tariff proposals, but those gains were erased amid his new jabs at Powell.
Powell has recently warned that Trump’s tariffs may lead to complications for the Fed. “Tariffs are highly likely to generate at least a temporary rise in inflation. The inflation effects could also be more persistent,” he said.
Trump criticizes Fed for rate stance
The Fed has managed to lower inflation while keeping unemployment around 4%. Last month, inflation was at 2.4%, not accounting for the Trump tariffs.
The Fed’s inflation rate target is 2%. Trump has also suggested terminating Powell before his term ends in 2026, an unprecedented move that could create further market instability. Krishna Guha of Evercore ISI warned of a “severe reaction” from markets if Trump fires Powell.
It’s unclear if Trump has the authority to remove Powell. The Supreme Court is currently hearing a case that could expand Trump’s power to fire federal officials before their terms end. Powell emphasized the importance of the Fed’s independence last week.
“Our independence is a matter of law,” he said. “We serve very long terms, so we’re protected by the law.”
The White House is exploring its legal options. Economic adviser Kevin Hassett told reporters that the administration “will continue to study” the possibilities of firing Powell.
Fed officials meet monthly to discuss potential interest rate changes. The next meeting is scheduled for May 6 and 7.
