Quick Breakdown
- Jerome Powell says a criminal probe into the Fed is an attempt to pressure interest rate decisions.
- Trump denies knowledge of the investigation but continues to criticize Powell publicly.
- With Powell’s term ending soon, Trump allies are positioning to reshape Fed leadership.
Federal Reserve Chair Jerome Powell has sharply criticized the Trump administration over a newly opened criminal investigation, warning it represents a direct threat to the central bank’s independence in setting interest rates.
Speaking on Sunday, Powell said the probe stems from the Fed’s refusal to adjust monetary policy to suit President Donald Trump’s preferences. Instead, he stressed, the central bank continues to base decisions on economic data and what it believes best serves the public.
According to The New York Times, the US attorney for Washington, DC, launched a criminal investigation on Friday into the Federal Reserve’s headquarters renovation project, including allegations that Powell may have misled Congress about its scope and cost. The investigation comes after years of criticism from Trump, who has repeatedly pushed for interest rate cuts and accused the Fed of holding back economic growth.
Powell: investigation tied to political pressure
Powell described the probe as part of a broader campaign of pressure and intimidation aimed at influencing monetary policy. While emphasizing his respect for the rule of law, he said the move was “unprecedented” and must be viewed alongside repeated threats from the administration.
“This is about whether the Federal Reserve can continue to set interest rates based on evidence and economic conditions,”
Powell said,
“or whether policy will instead be shaped by political pressure.”
Trump has previously threatened legal action over the Fed’s renovation project and publicly floated the idea of firing Powell. He also attempted to remove Fed Governor Lisa Cook over alleged mortgage fraud, a move later blocked by the Supreme Court.
Trump denies involvement, eyes Powell’s replacement
Trump denied any knowledge of the Justice Department’s investigation, telling NBC News he was unaware of the probe but criticized Powell’s performance as Fed chair and mocked the renovation project.
With Powell’s term set to end in May, Trump has already lined up several loyalists as potential replacements. Kevin Hassett, a senior economic adviser and widely seen as the frontrunner, has said Trump’s views would carry “no weight” in Fed decisions despite previously signalling support for rate cuts.
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