The current situation in Washington, particularly Donald Trump’s influence on Jerome Powell and the U.S. Federal Reserve (Fed), creates significant tensions in the financial markets. Trump is exerting pressure on the Fed to change its interest rate policy, which is seen as an attempt to “bring Powell to his knees.” This could have profound effects on the interest rate system and, consequently, on the entire financial landscape.
Possible Consequences of Such Intervention
Interest Rate Changes
The Fed currently has a key interest rate of around 4.5% for 10-year government bonds (as of 2025). A further increase in interest rates would massively raise the costs of government debt. If Trump were to push for a rate cut or force a different monetary easing, it could provide short-term relief but also pose long-term risks.
Financial Market Turbulence
An enforced change in interest rate policy through political influence can undermine confidence in the independence of the central bank. This often leads to increased market volatility and can trigger a so-called “financial tsunami” – strong price movements and uncertainties regarding corporate news and investment decisions.
Debt Crisis Risk
There are already warning signs of an impending debt collapse in the U.S. due to soaring interest costs. If political forces like Trump try to mitigate or redirect this development through interventions in the interest rate system, structural issues could worsen.
In summary, it can be stated: The tense situation between Donald Trump and Jerome Powell, as well as possible changes in the U.S. interest rate system, pose significant risks to stability and confidence in the financial markets. A resulting “financial tsunami” cannot be ruled out given the currently high interest rates and debt burden.