Former Treasury Secretary Lawrence Summers warned that President Donald Trump’s preference for the Federal Reserve’s interest-rate setting would trigger a surge in expectations for inflation, driving up long-term borrowing costs.

The dollar weakened as speculation arose over U.S. President Trump's potential dismissal of Federal Reserve Chair Jerome Powell. Concerns about the move affecting U.S. market stability heightened, while Trump criticized Powell for not cutting interest rates.

First, consider the case of Richard Nixon and his Fed Chairman, Arthur Burns. At the end of 1969, after he was nominated, but before he took office, Burns was told by Nixon that his predecessor “was always six months too late doing anything.

A new report shows inflation has picked up and analysts believe the prices of many goods increased, in part, because of President Trump’s tariffs. It will play into decisions by the Federal Reserve about when and whether to cut interest rates and comes as the president and his team have ramped up their pressure campaign on Fed Chair Jerome Powell.

Trump stated: "There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates." Trump posted on April 17: "Powell’s termination cannot come fast enough!"

US president’s offensive against Jay Powell has prompted swings in the dollar and lifted long-term inflation expectations