Capital Economics: Trumps dismissal of Powell will shock the market, and the new chairman will not cut interest rates as expected

Odaily News Stephen Brown, deputy chief economist for North America at Capital Economics, said in a report that the market reaction on Wednesday foreshadowed how investors might respond if Trump followed through on his threat to fire Fed Chairman Powell. Brown said the dollar, stocks and short-term bond yields could fall, while long-term yields could soar. Trump has refuted reports that he was trying to fire Powell, calling it extremely unlikely. However, the new Fed chairman is likely to be announced long before Powells term ends in May 2026. Brown stressed that even if the chairman is replaced, it is highly unlikely that the Fed will cut interest rates by 300 basis points as Trump has called for. (Jinshi)