Trump faces extraordinary moment in spat with Fed chair Powell
There has been some wild talk that the US administration could choose to weaponise some of the Fed's powerful global markets tools to coerce other countries in its tariff war, including allies. Bluntly, that use of what is known as swap lines, massive dollar funding at times of stress, would not have been possible under Powell. Is that where this is now going?More broadly it is difficult to detach the Powell intervention from what is going on elsewhere in the US. In recent days we have seen the deployment of militarised immigration police, routine threats the US could acquire sovereign territory from Nato allies, while the Supreme Court is about to confirm if his main economic policy has been illegal.There are some Republicans in Congress who will feel deeply uncomfortable about this Powell development in particular. The head of a central bank is someone with an alternative pole of power who, by design, must speak truth to power.Even Powell's unscheduled appearance might cause a reaction in markets, as occurred when Andrew Bailey spoke to BBC cameras in Washington DC in the middle of the mini-budget crisis.It is worth noting that the most significant moment of pause in the Trump agenda occurred last April, when the chaotic approach to tariffs fell foul of the global bond markets before the stabilising influence of the Treasury Secretary Scott Bessent took control.The Powell moment could see a repeat.
