Trump warned that if Powell does not cut interest rates immediately, the US economy may slow down.

On Monday local time, US President Trump increased pressure on Fed Chairman Powell, calling him a "big loser" and warning that the US economy could slow down if interest rates are not cut immediately.

Trump wrote on Truth Social that day that there would be almost no inflation due to falling energy and food prices. Referring to Powell, he said, "But the economy could slow down unless the big loser 'Too Late' cuts interest rates now."

Recently, Trump has repeatedly criticized Powell and hinted that he has the ability to replace the Fed Chairman before the end of his term, which has unsettled Wall Street. On Monday, as traders weighed the possibility of Powell being fired, US stocks fell sharply, with the S&P 500 down 2.3% and the Nasdaq down 2.6%.

As Trump made these remarks, central bank governors and economic policymakers from around the world were scheduled to attend the International Monetary Fund (IMF) and World Bank spring meetings in Washington this week.

In addition, Trump lashed out last Thursday, saying that Powell's term should end "the sooner the better." Trump then told reporters, "If I want him out, he'll be out very quickly, believe me."

The Trump administration's decision to impose comprehensive tariffs on foreign imports has raised concerns that inflation could intensify as consumers and businesses begin to feel the impact of additional tariffs. The uncertainty created by Trump has thrown global markets into turmoil and dimmed the outlook for the world's largest economy, with the US dollar continuing to weaken as investors pull funds from US assets.

Powell said last week in a speech at the Chicago Economic Club that the US Fed must ensure that tariffs do not trigger a more sustained rise in inflation, and stated that the US Fed would "wait for a clearer situation before considering adjustments to our policy stance."

Although Trump appointed Powell as Fed Chairman during his first term, his team is now studying whether it is possible to legally fire the central bank leader before his term expires in May 2026. In response, Powell made it clear that, according to the law, the president cannot remove him.

White House National Economic Council Director Kevin Hassett said last week that Trump and his team are studying whether Powell can be fired. This has heightened concerns about the independence of the US Fed and made investors increasingly uneasy in the escalating trade war.

Evercore ISI Vice President Krishna Guha said that any attempt by Trump to fire Powell could trigger a significant sell-off in US stocks. "If you start questioning the independence of the US Fed, you are raising the threshold for the US Fed to cut interest rates. If you actually try to remove the Fed Chairman, I think you will see a severe market reaction, with yields rising, the US dollar falling, and stocks being sold off."

Corpay Chief Market Strategist Karl Schamotta commented, "If the US Fed's dual mandate—maintaining price stability and promoting full employment—is diluted by a series of new goals set by the White House, policymakers may find that they cannot significantly tighten policy in the face of sudden price increases."