Trump Advisors Seeks To Diminish Fed’s Liberty; Jerome Powell’s Chair On Stake?

In a startling revelation, reports from CNBC, citing The Wall Street Journal, indicate that former President Donald Trump and his advisors are contemplating a seismic overhaul of the Federal Reserve. Notably, the plan, outlined in a confidential 10-page document, proposes unprecedented influence for Trump over the central bank’s operations, potentially including the removal of Fed Chair Jerome Powell.

Donald Trump Threatens Fed’s Autonomy

The concerns over the Fed’s hawkish stance with their rate hike plans have been mounting lately, weighing on the investors’ sentiment. Besides, the recent higher-than-anticipated PCE inflation data has further dampened the confidence of the market participants. Notably, amid this, the latest report on Donald Trump’s plan has sparked discussions in the global financial market, let alone the cryptocurrency sector.

Meanwhile, the proposed plan, described as highly secretive, aims to grant Trump unparalleled authority over the Federal Reserve’s decision-making processes. According to the latest report, key elements of the plan involve consulting Donald Trump on interest rate decisions and potentially installing him as an “acting” central bank board member. 

In addition, the Treasury Department could assume oversight of the Fed’s bond-buying activities, introducing a new layer of executive control. Notably, such measures would mark a significant departure from the traditional independence of the Federal Reserve, raising concerns about the politicization of monetary policy. 

In addition, the draft suggests that former U.S. President Donald Trump could even dismiss current Fed Chair Jerome Powell from his position, underscoring the extent of the proposed changes.

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Potential Ramifications and Market Impact

The revelation of Trump’s plan comes at a time of heightened uncertainty in financial markets, particularly regarding the Federal Reserve’s monetary policy stance. Investors are already grappling with concerns over a potential shift towards a more hawkish approach amid mounting inflationary pressures and tepid economic growth. With GDP data and PCE inflation figures painting a somber picture, the prospect of diminished rate cut expectations further clouds the outlook for investors.

Meanwhile, the proposed restructuring of the Federal Reserve could exacerbate market volatility and undermine confidence in the central bank’s independence. While Trump campaign officials have downplayed the significance of the draft proposals, their potential implications for monetary policy decision-making cannot be overlooked. 

However, CNBC said that the Federal Reserve’s spokesperson declined to comment on the report, leaving many questions unanswered about the future direction of U.S. monetary policy.

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