synopsis

Warren, who serves as the ranking member of the Senate Banking Committee, argued that the stability of the financial markets depends on maintaining the independence of institutions like the Federal Reserve in an interview with CNBC.

Senator Elizabeth Warren warned on Thursday that U.S. markets would “crash” if President Donald Trump attempted to fire Federal Reserve Chairman Jerome Powell, emphasizing the risks of undermining the Fed’s independence.

Warren’s remarks came after Trump criticized Powell in a TruthSocial post, claiming the Fed chair’s “termination can’t come fast enough.” 

Powell, who was nominated by Trump during his first term, has previously said that the President does not have the authority to fire him.

“I’ve tangled with Powell on a regular basis about both regulations and interest rates,” Warren said in a CNBC interview. “But understand this, if Chairman Powell can be fired by the president of the United States, it will crash markets in the U.S.”

Warren, who serves as the ranking member of the Senate Banking Committee, argued that the stability of the financial markets depends on maintaining the independence of institutions like the Fed. 

She cautioned that if economic decisions were subject to the whims of a President, the U.S. could risk resembling a “two-bit dictatorship,” rather than a stable democracy where critical financial mechanisms remain insulated from political pressure.

Trump has consistently criticized Powell and the Fed for not cutting interest rates more aggressively, hoping to stimulate faster economic growth. 

However, Powell and the Federal Reserve have signaled they remain cautious about additional rate cuts, pointing to the uncertainty created by Trump’s shifting tariff agenda. 

In a speech on Wednesday at the Economic Club of Chicago, Powell said the administration’s trade actions are “likely to move us further away from our goals.”

Global trade conditions have continued to deteriorate. On Wednesday, the World Trade Organization cut its 2025 forecast for global merchandise trade, now expecting a 1.5% contraction – the steepest decline since the COVID-19 pandemic began. The WTO cited growing protectionism and the potential for U.S. “reciprocal tariffs” as key drivers of the downgrade.

World Bank President Ajay Banga also raised alarms on Wednesday, urging developing economies to reduce tariff barriers. He warned that the rise in protectionist measures — driven in part by U.S. trade policy — is amplifying global uncertainty and weighing on the economic outlook.

IMF Managing Director Kristalina Georgieva reinforced those concerns Thursday, calling trade policy uncertainty “literally off the charts.” She said the Fund will revise its global growth outlook downward, though it still does not anticipate a recession.

Markets remained choppy on Thursday afternoon. The Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100, was little changed. The SPDR S&P 500 ETF Trust (SPY) rose 0.5%, while the SPDR Dow Jones Industrial Average ETF (DIA) slipped as much as 1%.

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Read also: IMF Chief Warns Trade Policy Uncertainty Is ‘Off the Charts,’ Global Growth Forecast to Be Cut