Global markets at risk of collapse if Trump moves ahead with firing Fed chair

US President Donald Trump could trigger a global economic crisis should he attempt to get rid of Federal Reserve Chair Jerome Powell, a move he has repeatedly threatened before.

This warning has been voiced in a latest article published by CNN, Caliber.Az reports.

In it the publication forecasts that a revolt in global markets, including a possible collapse in the dollar and US bonds, could take place should Trump remove the head of the US' central financial institution.

According to their article, the US dollar index which measures the dollar’s strength against six major foreign currencies, dropped as much as 0.8% on July 16 after reports that Trump was moving closer to removing the Fed chair.

The president, meanwhile, pushed back those claims by telling reporters at the White House it is unlikely he would fire Powell.

“We’re not planning on doing anything,” Trump said. “I don’t rule out anything, but I think it’s highly unlikely, unless he has to leave for fraud.”

CNN argues that the "Federal Reserve's independence is a cornerstone of US financial markets, and perceptions of an erosion of that independence could spark a sharp sell-off in the dollar and US government bonds that could have lasting damage for America’s markets and its economy — along with its international reputation."

Experts from the US stock exchange maintain the view that the likelihood of the president actually moving to oust the Fed chair remains low, due to legal uncertainties and awareness of officials like Treasury Secretary Scott Bessent that markets would reject the move. However, the article argues that the fact that Wall Street are not anticipating a possibility in which Powell is removed "leaves room for a severe reaction in markets if Trump catches investors off-guard and goes forward with a legally contentious move to assert control over the Fed."

The article further notes that the US Supreme Court has signalled it would uphold the Fed chair’s position unless, similar to Trump's statement, a "cause" for removal would arise, which CNN reports "is interpreted in legal terms as narrowly related to misconduct" and not "policy disagreements."

By Nazrin Sadigova