Trump's Pressure on Fed May Influence Rate Decisions, Expert Says

According to BlockBeats, Francesco Bianchi, an economics professor at Johns Hopkins University, has expressed skepticism about U.S. President Donald Trump's likelihood of following through on his threat to dismiss Federal Reserve Chairman Jerome Powell. Despite this, Bianchi notes that Trump's public campaign to push for interest rate cuts could still exert pressure on the Fed's decision-making process. Following Trump's threat last week, the Fed is aware that it could be blamed publicly if an economic recession occurs.Powell has made it clear that he is not in a hurry to lower interest rates, prompting Trump to suggest the possibility of firing him. This exchange led to a significant drop in the stock market, as concerns grew over the potential weakening of the Fed's independence. Bianchi believes Trump will not act on his threat, primarily because Powell's term is set to end in about a year. The chaos that would ensue from replacing Powell would outweigh any potential benefits, and such a move could lead financial markets to anticipate further interest rate hikes.