Analysis: If Trump fires Powell, it will undermine the independence of the Federal Reserve and may directly trigger an economic recession

According to Mars Finance News, on April 20, Evercore ISI analysts stated that any attempt by the Trump administration to dismiss Federal Reserve Chairman Powell would "lead to a surge in stagflation trading," but such dismissal is "unlikely to occur". The trends in bond and foreign exchange markets indicate that the market has lost confidence in Trump's economic policies. However, there are currently no signs that the market has lost confidence in the Federal Reserve, as inflation expectation indicators remain at low levels. Any action that undermines the Fed's independence would lead to a surge in long-term yields due to inflation risks, a sharp steepening of the yield curve, a sharp drop in the US dollar, and a comprehensive increase in various risk premiums, including stock risk premiums, which would likely directly trigger an economic recession. (Jinshi)