Background on Jerome Powell and the Federal Reserve
Jerome Powell, the current Chair of the Federal Reserve (Fed), has been a significant figure in U.S. monetary policy since February 2018. Appointed by former President Donald Trump, Powell has been instrumental in guiding the Fed’s decisions on interest rates and maintaining financial stability. His term is set to expire in February 2022, making him a potential target for Trump’s influence or criticism.
Trump’s Pressure on Powell and the Fed
In recent weeks, President Trump has publicly criticized Powell and the Federal Reserve for not lowering interest rates to stimulate the economy. Trump’s concerns stem from his belief that there is little inflation (2.4% annual rate) and that lower rates would boost economic growth.
Trump’s economic advisor, Kevin Hassett, hinted at the possibility of replacing Powell. The President’s aggressive stance was evident in a Truth Social post, where he urged Powell to immediately cut interest rates or face economic slowdown.
Impact on Wall Street
On Monday, major U.S. stock market indices experienced significant declines due to Trump’s criticism of Powell and the Fed.
- S&P 500: Fell 2.36% to close at 5,158.20 points.
- Nasdaq Composite: Dropped 2.55% to reach 15,870.90 points.
- Dow Jones Industrial Average: Declined 2.48% to hit 38,170.41 points.
Analysts from Banamex explained that investors are concerned about the Fed’s independence and the lack of progress in U.S.-China trade negotiations, which further weighed on Wall Street.
Tech-Heavy Nasdaq Takes a Hit
The Nasdaq, heavily weighted towards technology stocks, suffered the most due to large declines in the seven leading growth stocks.
- Tesla: Down 5.76% to $227.46 per share
- NVIDIA: Down 4.51% to $96.91 per share
- Meta (formerly Facebook): Down 3.39% to $484.48 per share
Mexican Stock Markets Advance
Meanwhile, Mexico’s stock markets gained on their return from Semana Santa (Easter) holidays.
- S&P/BMV IPC: Rose 1.40% to 53,758.75 points.
- FTSE-BIVA: Increased 1.49% to 1,094.50 points.
Both indices have been on an upward trend for four consecutive sessions, with the BMV rising 4.39% and BIVA advancing 4.64%.
Key Questions and Answers
- Who is Jerome Powell? Jerome Powell is the Chair of the Federal Reserve, appointed by President Donald Trump in February 2018.
- Why is Trump criticizing Powell and the Fed? Trump believes that lower interest rates would stimulate economic growth, given the low inflation rate (2.4% annual). He has publicly pressured Powell to cut rates immediately.
- How did Wall Street react to Trump’s criticism? Major U.S. stock market indices, particularly the Nasdaq, experienced significant declines due to uncertainty surrounding the Fed’s independence and trade tensions between the U.S. and China.
