US federal prosecutors have initiated a criminal investigation into Federal Reserve Chair Jerome Powell, escalating a protracted conflict with President Donald Trump over monetary policy and central bank independence. In a stunning development, the US Justice Department has opened a criminal inquiry into Jerome Powell, the chair of the Federal Reserve, after serving grand jury subpoenas related to his testimony before Congress last June. Powell announced the investigation on Sunday, stating that the threat of indictment stems from his commitment to setting interest rates based on economic analysis rather than political directives. This move represents a dramatic new phase in the long-simmering feud between Powell and President Trump, who has consistently pressured the Fed to lower rates to boost the economy.
The conflict dates back to Powell’s appointment in 2018, with Trump frequently criticizing him as too slow to cut interest rates amid persistent inflation. In recent months, tensions have flared publicly, including a heated exchange over renovation costs at Fed buildings. Powell has maintained that the Fed must remain independent from political influence to effectively manage monetary policy, a stance that has put him at odds with the administration.
Powell emphasized that the investigation is not merely about his past testimony but is part of a broader pattern of administration pressure. “This unprecedented action should be seen in the context of ongoing threats,” he said, asserting that the legal threat is a consequence of the Fed prioritizing public interest over presidential preferences. His statement underscores the high stakes for central bank autonomy in the United States.
President Trump, when asked about the investigation, denied any knowledge, telling NBC News, “I don’t know anything about it.” However, he continued to attack Powell’s competence, calling him “not very good at the Fed” and alluding to potential lawsuits. This rhetoric aligns with Trump’s previous criticisms, where he labeled Powell a “numbskull” and blamed him for economic sluggishness.
Legal experts and economists have expressed alarm over the investigation, warning that it could undermine trust in the US financial system. Chris Richardson, an independent economist, described it as “a direct attack on the trust that the world can have in the US and its institutions.” Such a move, unprecedented in a major developed economy, risks eroding the credibility of the Federal Reserve and could have ripple effects globally.
The investigation has drawn condemnation from lawmakers and former Fed officials. Members of the Senate Banking Committee have denounced the administration’s actions, highlighting concerns about the rule of law and the separation of powers. This political backlash suggests that the conflict may intensify, with potential implications for upcoming Fed decisions and economic policy.
Looking ahead, Powell’s term as chair ends in May, but the legal proceedings could linger, affecting his legacy and the Fed’s operations. The situation raises questions about the future of central bank independence in the US, as political interference becomes more overt. Analysts note that similar moves in other countries have often led to economic instability and loss of investor confidence.
In conclusion, the criminal investigation into Jerome Powell marks a critical juncture in the relationship between the Trump administration and the Federal Reserve. It underscores the challenges of maintaining institutional integrity amid political pressure and sets a concerning precedent for economic governance. The outcome will likely influence not only US monetary policy but also global perceptions of American financial leadership.
