Federal Reserve Chair Cites Interest Rate Disputes as Backdrop to DOJ Probe
Federal Reserve Chair Jerome Powell has urged {that a} felony investigation initiated by federal prosecutors is politically motivated. He argued it stems from the central financial institution’s refusal to align interest-rate coverage with the President’s preferences.
This motion comes as Powell’s time period nears its expiration in May 2026 amid intensifying friction with President Donald Trump.
Federal Reserve Chair Links Criminal Probe to Rate Policy Standoff
In a latest video, Federal Reserve Chair Powell disclosed that the US Department of Justice issued grand jury subpoenas to the Fed on Friday. According to Powell, the transfer included the specter of a felony indictment tied to testimony he delivered to a Senate committee final yr in regards to the $2.5 billion renovation of the central financial institution’s headquarters in Washington, DC.
However, Powell described the motion as “unprecedented.” He added that it must be seen inside a broader context of sustained stress and threats directed by the administration.
He emphasised that the Federal Reserve had persistently stored Congress knowledgeable concerning the renovation by testimony and public disclosures. The chair careworn that claims associated to the mission are getting used as a pretext. Powell linked the Justice Department probe to ongoing coverage disputes.
“The risk of felony expenses is a consequence of the Federal Reserve setting rates of interest based mostly on our greatest evaluation of what’s going to serve the general public, moderately than following the preferences of the President,” he acknowledged. “This is about whether or not the Fed might be in a position to proceed to set rates of interest based mostly on proof and financial situations—or whether or not as a substitute financial coverage might be directed by political stress or intimidation.”
The Federal Reserve reduce its benchmark rate of interest three times in the second half of 2025. The most up-to-date discount got here in December, placing rates of interest in a spread of three.50% to 3.75%. The central financial institution additionally ended its quantitative tightening program on December 1, 2025.
Trump Denies Knowledge of DOJ Probe Into the Federal Reserve
It’s value noting that since returning to the White House in January 2025, President Trump has repeatedly criticized Powell for not chopping charges extra aggressively and has even suggested the possibility of eradicating him from his submit.
However, in an interview with NBC, Trump said he was unaware of any Justice Department investigation involving the Federal Reserve.
“I don’t know something about it, however he’s actually not excellent on the Fed, and he’s not excellent at constructing buildings,” Trump said on Sunday.
He added that the DOJ’s subpoenas had nothing to do with interest-rate coverage.
“No. I wouldn’t even consider doing it that approach. What ought to stress him is the truth that charges are far too high. That’s the one stress he’s obtained,” he added.
Meanwhile, with Powell’s time period set to expire in May 2026, President Donald Trump is transferring nearer to naming the following chief of the Federal Reserve. Fox News reported that Trump has narrowed his shortlist to four candidates: Kevin Hassett, Kevin Warsh, Christopher Waller, and Rick Rieder.
According to the report, Trump has one remaining interview earlier than making a closing choice. In December, he said the following Fed chair can be somebody who “believes in decrease rates of interest by so much.”
Kevin Hassett, a long-time conservative economist and a key financial adviser to Trump, is widely viewed as a main contender to succeed Powell.
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