Trump's Fed Criticism Risks Policy Delays and USD Decline - Market Impact Analysis

President Donald Trump's unprecedented attacks on Federal Reserve Chair Jerome Powell could significantly impact monetary policy and currency markets. Trump's aggressive campaign against the Fed's political independence, including attempts to remove Governor Lisa Cook, may force the central bank into a defensive position that delays necessary rate cuts. According to Lloyds Bank's market insights team, political pressure makes it difficult for the Fed to shift to dovish policies promptly. This creates a "behind the curve" scenario where monetary policy lags economic conditions. The Fed faces a catch-22: cutting rates quickly risks appearing politically compromised, while delaying action could worsen economic slowdown. This uncertainty threatens the U.S. dollar's stability. The dollar index has already dropped nearly 10% this year to 97.64, while bitcoin has rallied 24% to $115,600. Market analysts suggest prolonged policy delays could lead to more aggressive rate cuts later, potentially interpreted as panic measures that increase financial market volatility, particularly affecting dollar-denominated assets like gold and cryptocurrencies.