Trump's Relentless Attacks on Fed May Deepen Policy Lag, Send USD Lower

Core Viewpoint - President Trump's criticism of Federal Reserve Chair Jerome Powell for maintaining high interest rates is seen as a significant political maneuver that could undermine the Fed's independence and potentially lead to a sell-off in the U.S. dollar [1][2]. Group 1: Trump's Actions Against the Fed - Trump's administration has taken the unprecedented step of petitioning the U.S. Supreme Court to allow the firing of Federal Reserve Governor Lisa Cook, marking the first forced removal of a sitting Fed governor since its establishment in 1913 [4]. - Following a judicial block preventing Cook's ousting, Trump's attacks on the Fed are expected to intensify as Powell approaches the end of his term [5][6]. Group 2: Economic Implications - Trump's campaign reflects a desire for the Fed to adopt a more responsive monetary policy, advocating for ultra-low interest rates around 1%, significantly lower than the current rate of 4% [7]. - High interest rates are argued to keep mortgage costs prohibitively high, hindering homeownership and imposing billions in unnecessary debt refinancing expenses, which Trump frames as a missed opportunity in a strong economy [8]. - Economists generally agree that current rates are too high, especially in light of weakening labor markets and consumer health, leading to the perception that the Fed is "behind the curve" in adjusting rates [9].