From Financial Modeling Prep: 2025-04-23 02:38:00

U.S. markets react sharply to rumors of Trump ousting Fed Chair Powell. Capital Economics says initial shock may not be disastrous, but risks depend on replacement and policy battles. Equity markets could rally with rate-cut-friendly successor. Bond yields may rise due to political risk. Dollar likely to weaken amid Fed independence doubts.

Potential replacements for Powell include Kevin Hassett and Kevin Warsh. Hassett has White House ties but lacks Fed experience. Warsh is a policy veteran but may struggle to gain FOMC credibility. A hostile FOMC could resist rate cuts, causing policy gridlock and market uncertainty.

Longer-term risks include Fed independence erosion, tariffs impacting markets, and financial stability concerns. Investors should monitor Fed events, position defensively in portfolios, and stay informed on succession news to navigate market volatility. While initial market reaction may be brief, the broader implications for Fed policy and independence pose a significant risk.



Read more at Financial Modeling Prep:: Should Trump Fire Fed Chair Powell? Market Implications and Risks