Trump’s Plan to Oust Powell Risks Market Chaos and Legal Battle

- Trump seeks to remove Powell before his term ends in 2026. - This action could trigger market instability and legal battles. President Donald Trump’s intent to prematurely remove Federal Reserve Chair Jerome Powell could destabilize financial markets and spark extensive legal conflicts. On June 11, 2025, Bloomberg reported that Trump aims to replace Powell with a lower-rate advocate. On June 11, Cryptopolitan also reported that Trump intends to replace Powell, seeking an advocate for lower rates. This move could catalyze several crucial repercussions: Firstly, a legal battle appears almost certain because Powell enjoys strong bipartisan support within Congress and has declared he would not resign due to political pressure. This stance could lead to a prolonged, resource-intensive court confrontation. Secondly, this plan threatens market stability, with Wall Street already feeling the effects of this potential upheaval, as rising 10-year Treasury yields signal investor anxiety. If Trump replaces Powell with a supporter of aggressive rate cuts, this instability could escalate, potentially leading to dramatic fluctuations in stock and bond markets. Consequently, investors would likely adopt a "sell USA" strategy in response to heightened uncertainty, a move that would severely affect trust in the U.S. bond market and the U.S. dollar. Economic uncertainty presents another significant concern, as a standoff over Powell’s removal could paralyze Fed operations and damage investor confidence. Furthermore, discussions about a "Shadow Fed" could further confuse and worry investors, particularly if a nominee-in-waiting were to influence policy before official confirmation. Such a situation risks undermining the consistency and predictability of U.S. economic policy. The Federal Reserve’s credibility also faces a threat. If the institution is perceived as politically compromised, its reputation as an independent body could suffer, thereby weakening its role in fighting inflation and maintaining economic stability. Broader economic repercussions include potential impacts on the real economy, with some economists warning that the crisis could usher in a recession. Indeed, uncertainty surrounding Fed leadership and policy direction could deter investment and adversely affect economic growth. Several candidates, including Scott Bessent, Kevin Warsh, Kevin Hassett, Christopher Waller, and David Malpass, could replace Powell. These individuals generally favor lower interest rates, a preference aligning with Trump’s demands but contrasting with Powell’s current cautious stance against rate cuts due to economic conditions. According to CoinMarketCap on June 11, as of 12:00 UTC, Ethereum (ETH) is trading at $3,214, and its 24-hour trading volume increased by 2.3%. This data underscores ongoing market activities amidst potential changes in Federal Reserve leadership.