Why the Fed's independence from the White House is guarded so closely

"The Justice Department has threatened the Federal Reserve with a criminal indictment over the testimony of Fed Chair Jerome Powell this summer regarding its building renovations, Powell said over the weekend. It is a major escalation by the administration after repeated attempts by President Donald Trump to exert greater control over the independent institution. Trump has repeatedly attacked Powell for not cutting the short-term interest rate, and even threatened to fire him. Powell's caution has infuriated Trump, who has demanded the Fed cut borrowing costs"

"to spur the economy and reduce the interest rates the federal government pays on its debt. That anger has not subsided even after the Fed cut interest rates in three of the final four months of 2025. Trump has also accused Powell of mismanaging the U.S. central bank's $2.5 billion building renovation project. In a sharp departure from his previous responses to attacks by Trump, Powell described the threat of criminal charges as simple "pretexts" to undermine the Fed's independence when it comes to setting interest rates."

The Justice Department threatened the Federal Reserve with a criminal indictment tied to Fed Chair Jerome Powell's testimony about building renovations. The move follows repeated pressure from President Donald Trump, who has publicly attacked Powell for not cutting short-term interest rates and at times threatened to fire him. Trump demanded rate cuts to spur the economy and lower federal borrowing costs; the Fed nonetheless cut rates in three of the final four months of 2025, yet tensions remained. Trump also accused Powell of mismanaging a $2.5 billion renovation, and Powell called the criminal-charge threat simple "pretexts" to undermine Fed independence. Some Republicans, including Sen. Thom Tillis, expressed concern, while the administration pursued action against Governor Lisa Cook based on an unproven mortgage-fraud allegation.

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