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The Dispute Between Trump and Powell Sparks Concerns Over Resurging Inflation

The Dispute Between Trump and Powell Sparks Concerns Over Resurging Inflation

金色财经金色财经2025/04/21 16:09
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Jinse reports that on Monday, U.S. long-term treasury yields rose, and the dollar resumed its decline after White House economic adviser Kevin Hassett stated that Trump and his team are continuing to explore the possibility of dismissing Federal Reserve Chairman Jerome Powell. This statement has raised concerns about the independence of the Fed. The market also believes that this issue could lead to an increase in inflation. Ian Lyngen and Vale Hartman, rate strategists at BMO Capital Markets, noted: "The monetary policy consequences of Trump's tariff plan put policymakers in a difficult position, as tariffs are expected to alter the economic trajectory and deviate the Fed from its two long-term goals." They added: "There is a sense that the inflation mandate of the Fed's dual mission is once again becoming a more explicit priority. Powell not only emphasized that price stability is a prerequisite for maximum employment, but he also continues to use relatively strong language on the price stability goal, rather than maximum employment." Meanwhile, Will Compernoll, a macro strategist at FHN Financial, warned that U.S. treasury yields could significantly rise if Trump fires Powell. He stated: “The importance of central bank independence in stabilizing market long-term inflation expectations cannot be overstated.” He continued: "This topic is prompting investors to step away from U.S. assets on the margin, but if the market perceives that the Fed's credibility is at genuine risk, long-term yields will skyrocket rather than just rise by a few basis points."

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