#PowellVsTrump

The latest development in the ongoing feud between Jerome Powell, the Federal Reserve Chair, and Donald Trump, the US President, is that Trump has escalated his campaign against Powell. Here's what's happening.

- *Trump's Threats*: Trump said he's not planning to fire Powell, but didn't rule out the possibility, especially if there's evidence of financial wrongdoing. He previously waved a draft dismissal letter in front of Republican lawmakers, causing markets to nosedive briefly.

- *Fed Renovation Controversy*: Trump's criticism of Powell centers around the Fed's renovation project, which Trump considers "unnecessarily lavish" and "way over-budget". Trump has hinted at financial wrongdoing, prompting Powell to ask the bank's inspector-general to review the project.

- *Market Reaction*: The dollar slumped over 1% and long-term Treasury yields spiked after Trump's comments, but the moves were largely reversed after he signaled a reprieve. Markets are wary of Trump's pressure campaign, which could complicate the central bank's path to lowering interest rates.

- *Potential Successors*: Trump's term as chair ends next May, and Trump has begun searching for a successor. Potential candidates include Kevin Hassett, the director of Trump's National Economic Council, and Kevin Warsh, a former Fed governor.

- *Fed Independence*: Trump's actions have sparked concerns about the independence of the Federal Reserve, with some analysts warning that firing Powell would slow growth, raise unemployment, and increase inflation.

It's worth noting that not everyone supports Trump's actions. Senator Elizabeth Warren, a Democrat and longtime Powell critic, has expressed skepticism about the administration's scrutiny of the Fed renovation, saying "nobody is fooled by this pretext to fire Chair Powell".