In a dramatic turn of events, President Donald Trump and his administration are weighing the possibility of dismissing Federal Reserve Chairman Jerome Powell, signaling escalating tensions between the White House and the central bank. This revelation came from National Economic Council director Kevin Hassett, who confirmed on Friday that the president's team continues to explore this contentious option.

Despite lacking direct authority to fire Federal Reserve governors, Trump could potentially set off a lengthy process requiring him to establish "cause" for Powell's removal. This development follows Trump's sharp criticism of Powell, whom he accused of politicizing monetary policy by refusing to cut interest rates.

The feud intensified when Trump declared, "If I want him out, he'll be out of there real fast, believe me." Such strong words highlight the growing friction as Powell warned that Trump's aggressive tariffs could spike inflation and stifle economic growth, placing the Federal Reserve in a challenging predicament.

This power struggle has raised alarms among economists and global market watchers. The mere thought of Trump attempting to dismiss the Fed chair could send shockwaves through international financial markets, jeopardizing investor confidence and economic stability.

Krishna Guha, Vice Chair of Evercore ISI, cautioned that any threat to the independence of the Federal Reserve could elevate market stress and push the economy towards stagflation—a dangerous combo of rising prices and stagnant growth. Moreover, Kristalina Georgieva, the Managing Director of the International Monetary Fund, emphasized the necessity for central banks like the Fed to maintain credibility amidst political pressures, especially as global economic conditions sour.

As this confrontation unfolds, the implications for U.S. monetary policy and the global economy could be monumental, with lasting repercussions for traders and citizens alike.