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Trump announces that Jerome Powell will be replaced as FED chief. After disputes with the president of the US central bank, a new person is to take over his office in order to implement Trump’s financial policy. How would this event affect the crypto market?
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Trump Replaces FED Chief Powell after Conflict in Central Bank
US President Donald Trump wants to replace FED chief Jerome Powell – as reported by Yahoo Finance. This opportunity arises from the voluntary resignation of FED Governor Adriana Kugler, which the US central bank had announced on Friday.
US President Donald Trump is said to have commented on Kugler’s resignation to the press. Accordingly, the governor supported Trump’s position with regard to the US key interest rate. She resigned her post due to disagreements with Powell. Trump wants a reduction in the key interest rate, which is currently between 4.25 and 4.50 percent.
FED President Jerome Powell rejects a reduction in the key interest rate on the grounds that the US dollar would then have to reckon with excessive inflation. Trump apparently wants to boost government spending through cheap loans, which would be cheaper with a low interest rate. The USA is already heavily indebted with 37 trillion US dollars.
The US President made it clear on Saturday what he thinks of Jerome Powell. He gives the FED President the nickname “Too Late” because, according to Trump, he did not lower the key interest rate in time.
“Too late Powell should resign, just like Adriana Kugler, a Biden appointed official. She knew he was doing the wrong thing with respect to interest rates. He [Powell] should also resign”, Trump demanded on Truth Social.
Only two weeks ago, Trump and Powell made headlines by indulging in digs in front of running cameras. At that time, the renovation costs of the US central bank were the bone of contention.
New FED Chief: What that Means for Crypto
According to Trump, a new FED chief will be announced within the next few days. Scott Bessent, the US Treasury Secretary, is already looking for a suitable successor for the incumbent Jerome Powell. According to media reports, Bessent himself will not take this position, although he was previously considered a hot candidate.
“I already have a few people in mind. I’ll probably announce it all in the next few days”, Trump explained in response to media inquiries.
According to CNN, it is likely that the choice will be between Kevin Warsh, a former FED governor, Christopher Waller, a current FED governor, and Kevin Hassett, the director of the US Economic Council.
It is to be expected that Trump will fill the position of FED President with a person who is willing to implement his political goals: key interest rate cuts.
Whether this can be implemented so easily in practice, however, is debatable. Powell’s term of office does not actually expire until 2028. Even the US President has no legal way to dismiss him prematurely, unless misconduct by Powell can be proven. That is precisely why Trump is demanding his voluntary resignation.
Should Trump nevertheless be able to implement his key interest rate cuts despite all resistance, this should have an extremely positive effect on the price developments on the crypto market. Crypto expert Arthur Hayes used rising spending and growing inflation by the largest economies in the world as the basis for his price forecast, according to which BTC would be listed at a quarter of a million US dollars this year.
The increasing loss of value of fiat currencies then leads to new investments in crypto. At the same time, the low key interest rate in this scenario leads to favorable credit conditions, which leads to increasing spending by private investors. The risk appetite of investors also usually increases then.
