Trump firing Powell will crash markets: Warren

Stock and bond markets and the value of the U.S. dollar will plunge if President Donald Trump fires Federal Reserve Chairman Jerome Powell, Sen. Elizabeth Warren warned Thursday.

“I think they crash,” Warren, D-Mass., said on CNBC’s “Squawk Box” when asked what would happen if Trump succeeds in pushing Powell out as head of the U.S. central bank.

As the top Democrat on the Senate Banking Committee, Warren has criticized Powell’s decision making in the past. But she argued Thursday that the president’s relentless attacks on the central bank leader risk undermining the independence of the Fed, which is key for U.S. and global financial markets.

That independence “provides a signal, both to our country and to financial markets around the world” that someone is in charge “who is supposed to filter through all of the economic data and then make a decision independent of politics,” she said.

While the president appoints the Fed chair, he “sits in a different box” than other Cabinet officials do, Warren said.

“He has different tools, and he is supposed to be independent and make those decisions,” she said of Powell. “I disagree with him often in this case, about how he’s made those decisions, but the independence itself is a value. It’s a value to the United States and some value to our markets.”

“If Donald Trump destroys that, then he brings down those markets,” Warren said. “He burns something of value to the United States.”

Warren’s stark warning came as Trump has ratcheted up his pressure campaign against Powell, whose continuing refusal to slash interest rates this year has made him one of the president’s arch enemies.

A senior White House official told CNBC and other news outlets Wednesday morning that Trump was likely to soon fire the Fed chair, after House Republicans allegedly encouraged the president to take that step during a private meeting Tuesday night.

Trump later denied those reports, though he left the door open to fire Powell at some point.

“We’re not planning on doing it,” Trump told reporters in the Oval Office. “I don’t rule out anything, but I think it’s highly unlikely, unless he has to leave for fraud.”

Powell said on July 1 that he likely would have cut rates by now, but that he has held off due to the economic uncertainty and inflation risks posed by Trump’s tariff policies.

Powell was appointed by Trump in 2017 during his first presidential term — an apparently inconvenient fact for the president, who also said Wednesday, “I was surprised he was appointed, I was surprised, frankly, that [President Joe] Biden put him in and extended him.”

Powell has said repeatedly that Trump is not legally permitted to fire him.

The White House did not immediately respond to CNBC’s request for comment on Warren’s remarks.