WASHINGTON – Jerome Powell, chairman of the Federal Reserve, delivered a stark message Sunday night, surprising white House officials with a direct response to what he called the weaponization of the Justice Department against him.
Fed Chair Powell Accuses Trump Management of Interference
The unprecedented public statement from Powell signals a deepening conflict between the White House and the central bank over monetary policy and independence.
- Powell alleges the Justice Department is attempting to intimidate him through grand jury subpoenas.
- The subpoenas relate to Powell’s congressional testimony regarding a $2.5 billion construction project at the Federal Reserve.
- The conflict centers on President Trump’s desire for lower interest rates, a move Powell believes should be based on economic conditions, not political pressure.
- The Supreme Court is currently considering cases that could grant the president greater power to fire heads of independent agencies.
Powell, speaking to the camera before an American flag, stated that the threat of criminal charges stemmed from the Federal Reserve setting interest rates based on its assessment of the public good, rather than presidential preferences.”This time, it isn’t going to work,” he asserted. the lack of prior warning to West Wing officials underscored Powell’s firm resistance to presidential pressure, a stance that has set him apart in Washington.
The Justice Department’s subpoenas, delivered Friday, are connected to Powell’s summer testimony before Congress concerning a $2.5 billion overhaul of the Federal reserve’s security systems. The investigation,according to sources familiar with the matter,centers on whether Powell misled lawmakers about the scope and cost of the project.
The timing of the subpoenas has raised eyebrows, coming as President Trump has repeatedly criticized the Fed’s interest rate hikes. The Fed began raising rates in 2022 as inflation proved persistent.
Mark Zandi, chief economist at Moody’s Analytics, believes there is room to lower the federal funds rate to 3%, a level he deems appropriate for a healthy economy. Though, he cautioned against attempts to force the Fed’s hand and undermine its independence.
“There’s no upside to that. Its all downside, different shades of gray and black, depending on how things unfold,” Zandi said. “It ends in higher inflation and ultimately a much diminished economy and perhaps a financial crisis.”
Zandi emphasized the importance of the Supreme Court’s upcoming decision regarding President Trump’s attempt to remove Federal Reserve Governor lisa Cook, citing unsubstantiated allegations of mortgage fraud. Powell’s term as chairman ends in May, but his governorship extends to January 2028. A criminal indictment related to the construction project could potentially provide the legal basis for Trump to remove him entirely.
“When he steps down in May, will he stay on the board or does he leave? That will make a difference,” Zandi said. He added that maintaining the fed’s independence is crucial for its role in establishing the U.S. as a safe haven for international bond investors, who rely on the bank to control inflation.
Lawmakers from both parties have expressed concerns about the investigation. North Carolina Sen.Thom Tillis, a Republican, announced plans to oppose the confirmation of any future Fed nominees until the legal matter is resolved. “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,” he stated in a social media post.
Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, accused Trump of attempting to “install another sock puppet to complete his corrupt takeover of America’s central bank.” She asserted that Trump is abusing the Justice Department to serve his own interests and those of his wealthy friends.
Rep. French hill (R-Ark.),chairman of the House Financial Services Committee,characterized the inquiry as an “needless distraction,” while acknowledging Powell’s integrity. House Speaker Mike johnson (R-La.) dismissed the notion that the Justice Department was being weaponized against Powell, stating, “Of course not.”
