Threat to Fed Autonomy Sparks Market Unease
Financial markets reacted cautiously this week as political pressure on the Federal Reserve intensified. Equity markets dipped and the dollar weakened following renewed criticism from the TRUMP administration, with investors showing particular concern about potential erosion of central bank independence.
Longer-dated Treasury yields rose sharply while gold prices hit record highs, reflecting growing risk aversion. Fed Chair Jerome Powell acknowledged policy disagreements with the WHITE House, revealing the central bank had received Justice Department subpoenas regarding headquarters renovations.
The tension marks the latest chapter in an ongoing conflict that has included attempts to remove Governor Lisa Cook and persistent demands for aggressive rate cuts. Market participants now weigh whether political interference could compromise the Fed's inflation-fighting credibility.
