France Warns of Dollar Credibility Risk if Trump Fires Fed Chair Powell
France has expressed concern that the U.S. dollar could lose global credibility if President Trump follows through with firing Federal Reserve Chair Jerome Powell. French officials emphasized that such a move would undermine the independence of the U.S. central bank, potentially destabilizing global financial markets. This statement comes amid ongoing tensions over U.S. monetary policy and leadership decisions.
In a significant development, French officials have expressed concern that the U.S. dollar's credibility could be undermined if President Donald Trump proceeds with removing Federal Reserve Chair Jerome Powell. This warning comes amid escalating tensions between the White House and the Federal Reserve, raising alarms about potential impacts on global financial stability.
French Concerns Over Dollar Stability
French authorities have indicated that any attempt by President Trump to dismiss Fed Chair Powell could erode international confidence in the U.S. dollar. Such a move is viewed as potentially compromising the perceived independence of the Federal Reserve, a cornerstone of global trust in the U.S. financial system.
Trump's Criticism of Powell
President Trump has publicly criticized Powell for not lowering interest rates amidst economic challenges, including the effects of recent tariffs. Despite Trump's frustrations, legal experts note that the Federal Reserve Act allows for the dismissal of a Fed Chair only "for cause," which typically refers to misconduct or incapacity, not policy disagreements. CBS News+3POLITICO+3CBS News+3Time
Powell's Stance on Independence
Chair Powell has affirmed his commitment to the Federal Reserve's independence, stating he would not resign if asked by President Trump. He emphasized that the law does not permit the President to fire or demote the Fed Chair over policy differences. BBC News+2CBS News+2Fox Business+2
Market Implications
The potential dismissal of Powell has unsettled financial markets, with investors wary of increased political interference in monetary policy. Analysts warn that such actions could lead to volatility in currency markets and diminish the dollar's status as the world's primary reserve currency.Reuters+2POLITICO+2Time+2
Conclusion
France's warning underscores the delicate balance between political leadership and central bank independence. As discussions continue, the global financial community remains attentive to developments that could influence the stability of the U.S. dollar and, by extension, the broader international economic landscape.
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