European Central Bank Governing Council member Joachim Nagel stated that former President Trump's repeated attacks on the Federal Reserve are having a counterproductive effect, eroding trust in U.S. institutions and triggering capital outflows from American assets and the U.S. dollar.
Speaking in Frankfurt on Thursday, Nagel cited a recent Bundesbank study examining developments since the beginning of 2025. The research indicated that Trump's pressure on the Fed did not lead to higher inflation expectations. Instead, it resulted in lower U.S. Treasury yields, declines in U.S. stock markets, a surge in gold prices, and a weaker U.S. dollar.
Nagel explained, "The authors interpret this as a repricing of risk on two levels. First, within U.S. markets, investors shifted from stocks to government bonds—this constitutes a domestic risk-off behavior. Second, the weaker dollar and rising gold prices suggest investors are pulling out of U.S. assets—this represents an international risk-off move away from the United States."
Nagel added that this indicates "investors are not just anticipating looser monetary policy—they are also concerned about the integrity of U.S. institutions and the potential far-reaching consequences of a loss of that integrity."
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