The US Dollar sank to a three-year low on Thursday (US time) amid an ongoing tussle between President Donald Trump and the Federal Reserve chair Jerome Powell. American media has brewed up a storm of speculations that the 79-year-old politician is eyeing potential candidates to replace the central bank boss.
Among one of his recent social media attacks on Powell, the Republican leader called him “very dumb,” adding to his usually referenced infamous nickname, “Mr Too Late,” as he retains a sour relationship with the central bank chief due to his slow path to lowering interest rates. On Tuesday, Trump took to his Truth Social platform and wrote, “We will be paying for his incompetence for many years to come.”
US Dollar slips to major low as Trump vs Powell rages in the background
Although Powell’s term doesn’t come to close until mid-May 2026, Trump is now reportedly considering announcing his replacement ahead of the usual advance revelations in such a case. As a result, the new Federal Reserve chair could be introduced to the country this fall. With that in mind, the Wall Street Journal’s US Dollar Index indicated a significant dip to 97.01 on Thursday morning.
This sudden slump marks a 0.5% low – which is the lowest number to be recorded since early March 2022 – against a basket of several other currencies.
Addressing how the POTUS’ comments against Jerome Powell were affecting the dollar, global investment firm Carlyle’s co-founder David Rubenstein said during an interview on The Claman Countdown that markets largely look out for “an independence of the Fed.”
“The Fed independence since the Fed was created… has been a very important bulwark of our economic system. So, to the extent that the Fed is not seen as independent, it hurts the dollar and therefore the dollar goes down,” he added.
Donald Trump’s incessant interventions in the matter of the Federal Reserve
Even though the Fed has often reiterated that economic data trumps political interference when it comes to making decisions, Donald Trump’s repeated attacks on its current chief have raised concerns about the central bank’s independence.
Trump’s expanded expression of his disdain of Powell continued even at the NATA Summit in The Hague this week. Describing him as “terrible” and a “very average mentally person” with “low IQ for what he does,” the US president maintained his smear campaign against the Federal Reserve chief at a press conference overseas. The American leader even hinted at him already having narrowed down his nominees as Powell’s replacement “within three or four people.”
Contrary to Trump’s “Mr Too Late” criticism of Powell, the central bank maintained during its discussion last week that its rates will stay constant this month as uncertainty prevails with the president’s contentious tariff plans still on the table. The next Fed meeting is slated for late July.
Who could replace Jerome Powell, what’s next for him
Given the severe extent of the war of words and differing ideologies between Powell and Trump, the WSJ had even claimed that the POTUS could even announce the Fed boss’ replacement as early as this summer instead of waiting for the fall.
US reports suggested that former Fed governor Kevin Warsh, Treasury Secretary Scott Bessent, the National Council director Kevin Hassett, former World Bank President David Malpass and Fed governor Christopher Waller were among the potential top picks for the job.
Even if Trump gets rid of him early, Powell could stay on as one of the members of the Fed’s board of governors. His term on the board is scheduled to run out of steam at the end of January 2028, as per Fox Business.