Power Struggle: The Standoff between the Fed's Titans, Trump and Powell's Game Escalates
The political and financial landscape of Washington is stirring, as the power struggle between Trump and Powell intensifies, pushing the Federal Reserve to the brink of a dual leadership dilemma.
The Trump administration has issued a subpoena from the Department of Justice, an unprecedented move that undoubtedly represents a strong intervention in the Federal Reserve's monetary policy, marking a new phase in the confrontation between the two sides.
The key variable in this game is hidden in drama: After Powell's term as chairman ends in May, he may remain as a Fed governor, breaking the pattern of singular authority and giving rise to a "dual power center standoff."
Former Cleveland Fed President warns that this dual pope dilemma will leave the market confused about the attribution of discourse power and the direction of interest rates, eroding the credibility of the Federal Reserve's policies.
Powell's continuation in office is precisely the roadblock to Trump's strategy, directly disrupting his plan to appoint a new chairman and push for significant interest rate cuts, creating strong internal checks and balances.
More critically, the escalation of the game may trigger institutional risks, and it cannot be ruled out that Trump may pressure to dismiss regional Fed presidents, impacting the Fed's century-old tradition of independence.
Central bank independence is the anchor for global markets, and divisions within the Fed could exacerbate volatility in capital markets, making it harder to predict interest rate paths.
The current situation is still fermenting, and the ultimate outcome depends on the judicial process.
Powell's choices and political maneuvering will profoundly affect the global financial landscape.