President Trump’s Federal Reserve Chairman Jerome Powell has given Washington Republicans courageously for conflicts that have further exacerbated financial market disruption and put federal independence and credibility at stake.
Republican aides and strategists say GOP lawmakers are very concerned about Trump’s tariff strategy and are afraid to send more waves of financial markets by threatening to block central bank obstruction by setting monetary policy.
The stock market was sold significantly, and volatility spiked Monday after Powell, who was appointed chairman of the Fed in 2018, called for the “present” by Powell, who was appointed as the “major loser” in 2018.
A senior GOP aide said Republican senators “a lot of concern” about the Fed’s independence, predicting that GOP lawmakers will step in to protect Powell when they return to Washington from their two-week break next week.
“Republicans [Senate] Banking Committee, and more [House] The Financial Services Commission has a lot of faith in Powell and believes it is not wise to undermine his economic agenda by dismissing Powell or cutting it early,” the source said.
“Powell has good relations with the hill,” the aide added, saying Powell, a Trump-appointed Republican, can “call favors” on the main GOP chair in Congress.
Even if Powell doesn’t ask for help, senior Republicans such as Senate Finance Committee Chairman Mike Krapo (R-Idaho) and Banking Committee Chairman Tim Scott (Rs.C.) may defend the Fed’s independence “given the way the market responded,” the aide said.
The Dow Jones industrial average slipped 971 points and lost 2.48%, while the S&P 500 and Nasdaq composite experienced a similar percentage drop.
At the same time, US Treasury yields rose for 10 and 30 years as investors digested Trump’s criticism of Powell.
The US dollar also fell on Monday, reaching its lowest level since 2022.
Republican strategists warned that Trump’s efforts to put pressure on Powell would likely backfire, as did his past efforts to threaten the independent Fed.
“It usually backfires. I think people are worried about that,” the strategist said.
Sources said a Republican senator who allied with some of the Magazines may be rooting for the president because “Trump definitely changed the party, so there are more people like him.”
But more traditional Republicans are not satisfied with the president’s efforts to pressure the Fed to cut fees, the strategist said.
“It’s true that old-fashioned people think, ‘This won’t work,'” the source added.
Strategists warned that market response could be “catastrophic” if Powell fires Powell completely to promote the Fed to cut interest rates, while financial institutions warn that the country is heading for a recession due to Trump’s widespread trade war.
Sources said Republicans view Powell as an important pillar of US economy stability amid Trump’s unpredictable tariff war on foreign trade partners, including allies such as Canada, Japan, South Korea and Taiwan.
“The market is all based on emotions and atmosphere, so it would be very bad to remove that stability among everything else. [Treasury Secretary Scott] Bescent and [Commerce Secretary Howard] “Ratnic is telling that to the president,” the strategist added.
Axel Merk, president and chief investment officer at Merk Investments, told Hill in an interview that Monday’s volatility in the financial markets was primarily due to concerns about the impact of Trump’s tariff war.
He said the market response would be much worse if Trump kicked Powell out of his job.
He warned that if the Fed loses credibility, “it will be more expensive to implement monetary policy.”
If the White House is considered a monetary policy direction, the Fed must make a big move to influence the market.
“We need to move interest rates rather than say a few words. We may have to step into the market,” he said. “There can be a lot of bad things happen when there is political interference.”
“Intermediated County County [politically] There have been very bad results in monetary policy,” he warned.
If investors lose confidence in US monetary policy and fear inflation will rise significantly over the next decade, they can invest elsewhere.
Krishnaguha, vice-chairman of Evercore ISI, the stock research and sales division of the global investment advisory firm, warned Monday that there would be a “severe” market response if Trump attempts to eliminate Powell.
“When we start raising questions about the independence of the Federal Reserve, we’re raising the bar for the Federal Reserve to be cut. I think if we actually try to remove the Federal Reserve chair, we’ll see a serious response in the market with higher yields, lower dollars and stocks selling.”
Federal Reserve Bank President Austan Ghoolsby warned that eliminating Powell could “pose a nuisance to the Fed’s reliability.”
Senate Republicans shattered their willingness to protect the Fed’s independence a few years ago when they stopped Trump’s controversial pick Judy Shelton, who serves on the Federal Reserve in 2020.
Shelton’s nomination has been criticized for his past statements in favor of a higher interest rate and a return to gold standard.
A former Senate aide who is well versed in the Senate debate at the time said former Senator Lamar Alexander (R-Tenn.), former Senator Mitt Romney (R-UTAH) and Senator Susan Collins (R-Maine) opposed her appointment.
Another controversial central bank leader, Trump pulled out of consideration in 2019 after facing Republican opposition in Congress.
Republican aides and GOP strategists said Powell’s tenure will continue until May 2026 only as a chair. This means Trump can wait another year for Powell to step down, rather than banish him in the coming weeks or months.
Republican lawmakers in the middle of a two-week Easter break remained almost silent as the war of words between Trump and Powell became heated.
Trump on Thursday said he was not happy with Powell and declared by visiting an oval office from Italian Prime Minister Giorgia Meloni, who said he had the power to replace him.
“If I wanted him, he’d come out of there really quickly, trust me,” Trump said. “I’m not happy with him.”
Trump also said the Fed Chairman “ends cannot come quickly enough.”
Powell was first appointed as Fed Chairman in 2017 and reappointed by former President Biden.
He said he wouldn’t resign as a chair in November if Trump asked him.
