When the Federal Reserve (Fed) changes how it works, it can shake up markets more than just replacing its leader. Investors are starting to care less about the buzz around removing Jerome Powell and more about real changes to how the Fed makes decisions. In fact, markets react more when changes in monetary policy occur when the Federal Reserve shifts its approach or structure than when leadership changes happen.
Even though President Trump calls for Fed Chair Powell to resign and continues to push for a Federal Reserve rate cut, it’s the idea of major reforms that’s making investors nervous. Changes in how the Fed reads inflation trends or updates its internal structure could have long-term effects. Treasury Secretary Scott Bessent recently said the Fed’s methods need a serious look, arguing that long-lasting change comes through updated strategy and clearer communication.
When Changes in Monetary Policy Occur, Markets React Differently
There was a short dip in the markets when Trump hinted at firing Powell, but they quickly rebounded after he suggested it probably wouldn’t happen. Experts say reform proposals carry a deeper, long-term market impact. The bigger influence comes from ideas like limiting the Fed’s independence, making its decisions more open to the public, or separating its regulatory work from its policy role.
Despite Trump’s ongoing comments—“President Trump calls for Fed chair Powell to resign” and claims that Powell “doesn’t get it”—investors don’t seem too worried about him being forced out. They’re more focused on whether a federal reserve rate cut is coming. Currently, traders are betting on a 75-point cut before the end of the year, showing they expect change whether Powell stays or not.
Trump’s focus on trump jerome powell might grab attention, but markets are watching bigger moves. If changes in monetary policy occur when the Federal Reserve adjusts its inner workings, that’s what could truly move markets—not just who’s in charge. Investors will be paying close attention to both talk and real proposals through the rest of the year.
