Escalation of tensions between Trump and Treasury Secretary rattles markets and policy circles

White House and Treasury at Odds, Powell's Future in Focus Again

Recently, rumors about Trump's intention to dismiss Federal Reserve Chairman Powell have once again stirred up a storm in Washington. According to The Wall Street Journal, Treasury Secretary Besent privately urged the President against such action, warning that it could trigger severe financial market turmoil and present legal and political risks. However, Trump fiercely rebutted, asserting that he doesn't need anyone to "explain the stakes".

INSIDERS revealed that Besent's private discussion with the President focused on the potential threat to the Fed's independence, as financial markets are highly sensitive to the dismissal of central bank officials. Mishandling could undermine investor confidence. Even more, if the dismissal leads to litigation, the whole process could be plunged into uncertainty.

Top-Level Disagreement Becomes Public, Advisory Team Divided

Trump’s inner circle is not entirely united. Some officials advocate for swiftly initiating Powell's replacement process to better control monetary policy within the year, while others argue that with less than a year left in Powell's term, the risks are too high, and it’s better to wait for natural succession.

Treasury Secretary Besent's remarks reveal a more pragmatic attitude. He pointed out that even if some Fed reforms are incomplete, the President can reshape policy by appointing a successor, without taking aggressive actions that could destabilize the market.

"Building Renovation" Becomes Political Tool, Fed Attacked Again

Interestingly, another pretext for this dismissal storm is the budget overrun in the renovation of the Fed's headquarters building. Trump and his allies claim the Fed has been wasteful in project management, using this to hype "financial transparency" issues and promote the legitimacy of "just cause dismissal".

This strategy is also reflected in White House’s recent appointment of local planning advisors, many of whom have strong political backgrounds and have declared their intention to push for a comprehensive audit of the Fed's renovation project.

Successor Arrangements Quietly Progress, Candidates Emerge

Though Trump publicly denies an imminent dismissal of Powell, multiple sources indicate that his administration has begun searching for replacements. Economic adviser Kevin Hassett is widely considered the "top contender" to succeed Powell, while presidential aides also suggest expanding the candidate list to strengthen influence on the Fed's decision-making body.

Treasury Secretary Besent recently stated in an interview: "We have many excellent candidates, and the appointment process will depend on the President's decision." This statement is seen as the Trump administration preparing for policy shifts in a relatively moderate manner.

Trump Denounces Media Reports, Dismissal Crisis Temporarily Eases?

Last Sunday, Trump responded to the media via his social platform: "I don't need anyone to tell me what's good for the market and what's good for the country." This tough stance has temporarily quelled speculation but hasn't eliminated market concerns about the Fed's independence.

The current situation remains highly uncertain. Despite the legal and political risks, whether the Trump administration will ultimately take action is yet to be observed. Whether Powell lands safely or not, this power struggle over the Fed's future direction has officially begun.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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