TechFlow, April 21 — According to Jinshi Data, on Monday, yields on long-term U.S. Treasury bonds rose and the dollar resumed its decline after White House economic adviser Hassett said that Trump and his team are continuing to explore whether they can fire Federal Reserve Chair Powell. This remark sparked concerns over the Fed's independence. Markets also believe this issue could lead to higher inflation. Ian Lyngen and Will Hartman, interest rate strategists at BMO Capital Markets, said: "The monetary policy implications of Trump’s tariff plans place policymakers in a bind, as tariffs are expected to alter the economic trajectory and push the Fed off its two long-term objectives." "There is a sense that the inflation component of the Fed's dual mandate is once again becoming a more explicit priority. Powell has not only deliberately emphasized price stability as a prerequisite for maximum employment but continues to use relatively strong language regarding the price stability goal rather than maximum employment." Meanwhile, Will Compernolle, macro strategist at FHN Financial, warned that if Trump fires Powell, U.S. Treasury yields could surge significantly. He said: 'The importance of central bank independence in anchoring long-term market inflation expectations cannot be overstated.' 'This topic is already prompting investors to marginally move away from U.S. assets, but if markets perceive a real risk to the Fed’s credibility, long-term yields will spike, not just rise by a few basis points.'
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