The US shares and the dollar have fallen abruptly when the attacks of the president of the United States, Donald Trump, against the head of the Central Bank of the United States, shake the confidence of investors in the higher economy of the world.
The Benchmark S&P 500 fell 2.36 percent on Monday, one of the most pronounced decreases of the year of one day.
The compound Nasdaq Technological heavy fell 2.55 percent, dragging the index to almost 18 percent from its position at the beginning of the year.
The dollar fell to a minimum of three years, at one time weaving 97,923 against a basket or important coins.
The US government bonds. UU. They also fell as investors sold traditional secure shelter assets, with the 10 -year treasure notes that rise above 4.4 percent.
The Asian markets opened widely more under Tuesday, with Nikkei 225 from Japan, the Hang Kong Hang Sang index and the Taiwan Taiex decreased around 0.8 percent, 0.6 percent and 0.5 percent, respectively, axis or 02:00 GMT.
The pronounced losses occurred when Trump renewed his attacks against the president of the United States Federal Reserve, Jerome Powell, marking the head of the Central Bank as a “great loser” and “Mr Too Late” on social networks for not moving faster to reduce interest rates.
Trump has repeatedly threatened to replace Powell, saying last week that his termination “cannot be quick enough.”
On Friday, Kevin Hassett, Trump’s main economic advisor, said the administration was studying the possibility of eliminating Powell, whose term extends until May next year.
Since he announced its most recent cut at its reference interest rate in December, the Federal Reserve Policies Formulation Committee has expressed warning about rates free rates in the short term amid the concerns that Trump’s radical inflation.
Powell warned in a speech last week that tariffs could leave the economy of the United States with weak growth, increasing inemploying and higher inflation at the same time, putting the dual objectives of the Central Bank or the maximum employment and the stable prices in “tension.”
“We know from experience in the United States and in many other countries that politicians are tempted to relieve the monetary while they are in office because the initial effects are to increase growth and employment. Only later, and lave lave lave lave lave. Gagnon, main member of the Peterson Institute of International Economics, told Al Jazera.
“The markets understand this and are concerned that President Trump can try to undo the long -standing protection of the Fed against political interference.”
Powell, who was nominated by Trump in 2017 and took the opportunity to fulfill another four -year period by the former president of the United States, Joe Biden, has said that he would not resign if he would be requested and insisted that he can only be eliminated by embezzlement.
According to a ruling from the United States Supreme Court transmitted in 1935, the Executive Power is prohibited from dismissing the heads of independent federal agencies such as the Federal Reserve, except the “cause.”
The Trump administration, which has tasks pointing to numerous established norms, is seeking to cancel the 90 -year precedent in a case of the Supreme Court related to its dismissal of the Board of Protection of Chiefs and National Labor Relations.
Any movement to fire Powell would almost surely send shock waves through financial markets, given the most centenary principle that the Federal Reserve would release interest rates from political considerations.
On Monday, Austan Goolsbee, president and executive director of the Bank of the Federal Reserve of Chicago, warned that any effort to undermine the independence of the Central Bank would have negative ramifications for the economy.
“When there is long -term interference, it will mean high inflation,” Goolsbee said in an interview with CNBC, without commenting directly on Trump’s attacks against Powell.
“It will mean worse growth and greater inemplenting.”
Gagnon said the financial markets were reacting to the “greater probability of presidential interference” with the Federal Reserve.
“In more general terms, investors will be less interested in celebrating investments in the United States if they believe that Fed will not be independent in the future because it means that the economy of the United States will not work as well in the future as in the past,” he said.