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Markets are sending a message to President Donald Trump: Don’t mess with the Federal Reserve.

Investors fled U.S. assets again on Monday after Trump put more pressure on the Fed to cut interest rates—potentially threatening its ability to act independently of the president’s desires. The latest Trump criticisms are making investors even less confident about the U.S. dollar and the country’s dominant role in global financial markets, analysts say.

Markets had “already started to entertain notions of de-dollarization ” following Trump’s tariff policies, according to Themistoklis Fiotakis, a top strategist at the British bank Barclays. Trump is adding fuel to the fire, Fiotakis wrote, bringing about risks to the dollar that are “too large to ignore.”

“The notion of the Fed independence being at risk … is an event that carries very significant tail risks not only for the dollar, but also for the global financial system,” Fiotakis wrote in a note to clients.

The concerns about Fed independence added to lingering concerns about the impact of tariffs on the economy, sparking a volatile session of trading on Monday . Major stock indexes fell more than 2%, U.S. Treasury securities sold off again, and the dollar hit its weakest level in three years .

The sell-off followed a Truth Social post on Monday from Trump calling Fed Chair Jerome Powell a “major loser” and saying that lower inflation figures call for rate cuts “NOW.” Last week, he wrote Powell’s termination "cannot come fast enough,” raising concerns that the president would seek to fire the central banker.

Financial markets are clearly uncomfortable with the politicization of the central bank , Thierry Wizman, global currency and rates strategist at the Australian financial services firm Macquarie, said in an interview.

“The market is okay with rates coming down. What the market is not okay with is having the president or politicians tell the Fed that the rates need to come down,” Wizman said.

What’s Different This Time Around?

Powell is no stranger to Trump’s attacks. Trump appointed Powell as Fed chairman during his first term as president, though he’d soon sour on Powell and criticize him publicly. In 2019, he questioned whether Powell was a bigger “enemy” for the United States than Chinese President Xi Jinping.

Despite his criticisms, Trump ultimately opted against removing Powell and thus avoided any legal fights that could ensue. Former President Joe Biden reappointed Powell as Fed chair for a term that is due to end in May 2026.

In his second term, Trump has been more forceful in removing independent agency leaders, whether at the Federal Trade Commission or the National Labor Relations Board.

It’s unclear whether he will bring that same view to the Fed. Treasury Secretary Scott Bessent has told the White House that firing Powell could prompt turmoil in financial markets, according to Politico . But Kevin Hassett, a top Trump economic adviser, said on Friday that the White House will “continue to study that matter.”

“We’d be remiss to conclude that the president’s rhetoric won’t lead to action,” Ian Lyngen, an interest rate strategist at BMO Capital Markets, wrote in a note to clients.

If he does attempt to remove Powell, the question could end up in the Supreme Court, Lyngen wrote.

“At a moment in which the Administration has already instilled ever-higher levels of uncertainty into the economic outlook, any attempt to remove Powell will add to the downward pressure on U.S. assets,” he wrote.

Read the original article on Investopedia