"The Trump administration's criminal investigation of Federal Reserve Chair Jerome Powell appeared on Monday to be emboldening defenders of the U.S. central bank against the efforts of President Donald Trump to control the Fed. The backlash reflected the bigger stakes of a contest about the fate of the Fed's independence, the balance of power within the federal government, and the path of the U.S. economy."
"Trump has long publicly lashed out against Powell for not slashing the Fed's benchmark interest rates to his liking, but the prospect of a criminal indictment was a step too far for an institution that has an outsized influence on both inflation and the job market. Several Republican senators have condemned the Department of Justice's subpoenas of the Fed, which Powell revealed Sunday and characterized as 'pretexts' to pressure him to sharply cut interest rates as Trump has demanded."
"White House press secretary Karoline Leavitt told reporters that Trump did not direct his Justice Department to investigate Powell. "One thing for sure, the president's made it quite clear, is Jerome Powell is bad at his job," Leavitt said. "As for whether or not Jerome Powell is a criminal, that's an answer the Department of Justice is going to have to find out.""
A criminal investigation into Federal Reserve Chair Jerome Powell by the Justice Department raised alarm among policymakers defending central bank independence. Republican senators criticized DOJ subpoenas that Powell described as pretexts to pressure him to cut interest rates at President Trump's request. Powell said the Justice Department threatened criminal indictments tied to his congressional testimony on renovation costs. The White House denied Trump directed the investigation while reiterating political criticisms of Powell's performance. Former Fed chairs and top economists compared the actions to interventions seen in poorer countries. Financial markets showed a muted response amid confidence in the Fed's resilience.
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