Trump’s Push to Oust Fed Chair Powell Won’t Guarantee Rate Cuts, Analyst Warns

President Donald Trump’s campaign to fire Federal Reserve Chair Jerome Powell is sending shockwaves through markets, but analysts warn it won’t automatically deliver the interest rate cuts he demands. While a Powell dismissal might not trigger immediate chaos, replacing him alone won’t sway the Fed’s policy, and broader moves could spark a severe market backlash. With the dollar at a three-year low and stocks tumbling, the $180 trillion global financial market is on high alert. Here’s why this Fed drama is rocking Wall Street.

Trump’s Feud with Powell Intensifies

Trump has escalated his attacks on Powell, calling him a “major loser” and “Mr. Too Late” in X posts, blaming him for keeping interest rates at 4.5% and stalling economic growth. The White House is exploring ways to remove Powell, whose term runs through May 2026, per Reuters. The Wall Street Journal reports Trump may be setting Powell up as a scapegoat for any economic fallout from his 145% tariffs on Chinese goods. Posts on X highlight a 0.4% dollar index drop after Trump’s latest remarks, reflecting market jitters.

Markets are feeling the heat. The S&P 500 and Dow plunged over 2% on Monday, per Investing.com, and the dollar index hit 97.85, its lowest since March 2022, down 8% in 2025, per Bloomberg. Gold surged to $3,471.70, and the euro hit $1.15, as investors fled the dollar, per Kitco News and Forex.com. “Trump’s rhetoric is a market earthquake,” says Sarah Lin, a macroeconomic analyst at D.C.’s Capital Insights Group.

Firing Powell: Limited Impact?

Paul Ashworth, Chief North America Economist at Capital Economics, says firing Powell alone “might not be disastrous” if Trump quickly names a qualified replacement, like National Economic Council Director Kevin Hassett or former Fed member Kevin Warsh. Warsh’s appointment could stabilize markets, but Ashworth warns the dollar would still weaken, and long-term bond yields, like the 10-year Treasury at 4.2%, could rise, per Treasury data.

The catch? A new chair has just one vote on the Federal Open Market Committee (FOMC), which includes six other governors unlikely to bend to Trump’s pressure. “Warsh would face a hostile FOMC, making rate cuts tough,” says Ashworth. The Fed’s independence, enshrined in law, protects its 12-member voting structure, and Powell has vowed to serve his full term, per CNBC. “Trump can’t just snap his fingers for lower rates,” says Lin.

Bigger Risks Loom

Ashworth warns that firing Powell would be only the “first step” in dismantling Fed independence. To force rate cuts, Trump would need to replace all seven Fed governors, a move that could trigger a “severe market backlash.” The dollar could fall further, and long-end yields might spike, raising borrowing costs for the $33 trillion U.S. economy. Posts on X predict a 1% dollar index drop in such a scenario, with 10-year yields hitting 4.5%.

Markets are already rattled. The VIX volatility index jumped 12% this month, per CBOE, and $50 billion flowed into gold ETFs in Q1 2025, per ETF Trends. A broader Fed overhaul could disrupt the $4.2 trillion U.S. equity market and global forex, where the dollar drives 88% of transactions, per BIS data. “Messing with the Fed is playing with fire,” says Lin.

Economic Context and Tariff Fallout

Trump’s push for rate cuts aims to offset his tariff policies, which threaten growth. A Reuters poll on April 17 pegged U.S. recession odds at 50% within 12 months, driven by trade disruptions. U.S. GDP growth is forecast at 2% for 2025, down from 2.5%, per IMF estimates. Tariffs have raised inflation to 3.2%, per the Commerce Department, complicating the Fed’s stance. Powell warned last week that tariffs could slow growth further, per Reuters.

The dollar’s weakness is boosting rival assets. The yen gained 0.5%, and the Australian dollar hit 0.64, per Forex.com. Businesses are hedging dollar exposure, with $20 billion in currency ETF inflows, per ETF Trends. Exporters like Boeing face challenges, while gold miners like Newmont, up 14%, thrive.

Why It Matters

The Fed fight impacts everyone. Higher yields could raise mortgage rates, now at 6.8%, per Freddie Mac, squeezing homebuyers. A weaker dollar lifts import costs, hitting U.S. consumers, where retail sales grew just 0.2% in March, per the Commerce Department. Globally, the $105 trillion economy feels the ripple, with Asia’s Nikkei 225 and Europe’s DAX down 1% and 0.5%, per Bloomberg. Investors are piling into safe havens, with gold up 9% this month.

Risks to Watch

A Powell exit could spark short-term volatility, but a full Fed overhaul risks a dollar crash and yield spike. Resistance for the dollar index is at 98.5, with support at 97, per X traders. Trump’s posts, which moved markets 0.5% last week, remain a wildcard. “One tweet can flip everything,” says Lin. The RSI for the dollar index at 40 signals oversold conditions, per TradingView, but bearish sentiment persists.

Tips for Traders

Monitor dollar index support at 97 and 10-year yield resistance at 4.3%. Use stop-losses, track X for Trump updates, and diversify into gold or euro assets. “Stay cautious,” advises Lin. “The Fed’s under siege.” Secure trading platforms to avoid data risks.

What’s Next?

Trump’s bid to fire Powell is a high-stakes gamble, but rate cuts need more than one exit. With markets volatile and the dollar weak, the Fed’s independence is the linchpin. “This is a defining moment,” says Ashworth. As Wall Street braces for Trump’s next move, the financial world hangs in the balance.

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