"A criminal investigation into the Fed, and him personally, over the renovation of the central bank's headquarters is an attempt to bully officials into setting policy according to the president's whims, said Powell: This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation. It definitely needed to be spelled out."
"The sanguine reaction probably flows from a few factors. First, this affair could fizzle out. An overspend on the refurbishment of a public building hardly seems like the stuff of criminal charges. Second, Powell's term ends in May. Third, a whole Fed committee sets rates so, if Powell's current colleagues prize their independence as he does, Trump can't impose his will overnight even if picks a tame poodle as the next chair."
The Department of Justice issued a subpoena related to the Federal Reserve's headquarters renovation, prompting concerns about the politicization of monetary policy. Critics warn that criminal investigations into central bank spending could become tools to bully officials and pressure rate decisions. Markets reacted mildly because the matter could fizzle, overspending on refurbishment may not yield criminal charges, the policymaking committee provides institutional resilience, and the Fed is already in a rate-cutting stance so disputes mainly concern pace. The episode raises the risk that political pressure or intimidation could undermine the principle of independent, evidence-based interest-rate setting.
Read at www.theguardian.com
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