Trump’s Fed Criticism Threatens to Raise US Borrowing Costs

President Donald Trump has intensified his attacks on the Federal Reserve, demanding lower interest rates to reduce US borrowing costs. He called Fed Chair Jay Powell a “moron” and moved to dismiss Governor Lisa Cook this week, accusing her of mortgage fraud. Trump has nominated loyalists to reshape the Fed board, raising concerns among economists about the erosion of central bank independence. Critics warn that politicizing the Fed could undermine its credibility and ultimately push long-term US borrowing costs higher. Markets have responded: the spread between two- and 30-year Treasury yields widened to a three-year high, and the US dollar fell 0.2% against major peers. Analysts at JPMorgan and RBC Capital Markets point to rising inflation expectations and volatility as potential consequences. With the Treasury’s average debt maturity at six years, long-term yields are key for government financing. Some economists suggest the Fed may resume crisis-era bond purchases if yields surge. The impending legal battle over Cook’s removal could reach the Supreme Court, adding to market uncertainty. As traders, monitor Treasury yield curves and Fed board appointments closely; shifts in US borrowing costs will influence fixed-income and currency markets.