Federal prosecutors have opened a criminal investigation into Federal Reserve Chairman Jerome Powell, he announced on Sunday. In a video, Powell revealed that the Justice Department served the agency with subpoenas and threatened criminal indictment regarding his testimony to a Senate committee on renovations to Federal Reserve buildings.
Powell described the probe as unprecedented, asserting that it may have been initiated due to his tension with Donald Trump, stemming from his refusal to lower interest rates despite the president's persistent public pressure.
This situation positions Powell as the latest official to find themselves at odds with Trump, subsequently facing a criminal investigation by the Justice Department.
The BBC has reached out to the Justice Department and the White House for comments on the matter.
Powell emphasized the importance of maintaining independent monetary policy free from political pressure, stating, This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or be swayed by political intimidation. He reiterated his commitment to the rule of law, insisting that no one is above accountability, including the chair of the Federal Reserve.
Trump, in a Sunday NBC News interview, claimed he was uninformed about the Justice Department's investigation. He remarked on Powell's performance as Fed Chair, stating, he's certainly not very good at the Fed, and he's not very good at building buildings. This investigation highlights a tense dynamic, escalating an ongoing dispute between Powell—whom Trump appointed as Fed Chair in 2017—and the Trump administration.
Concerns have been raised regarding Trump's attempts to pressure the Fed and undermine its independence in determining interest rates. Senator Thom Tillis voiced his intention to oppose any nomination by Trump for Powell's successor until the legal matters are resolved, stating, If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none.
Senator Elizabeth Warren criticized Trump's potential strategy to replace Powell and warned against moving forward with nominations before the investigation's resolution.
Negotiations surrounding the Fed's functions carry significant implications for the US economy, and discussions regarding Powell's investigation and pressures from the Trump administration have already contributed to market shifts, including a notable increase in precious metal prices amid uncertainty.
