In brief
Federal Reserve Chairman Jerome Powell is now under a criminal investigation by the U.S. Justice Department, triggered by concerns over his Senate testimony and President Trump's repeated public pressure for lower interest rates. Powell calls the inquiry unprecedented and believes it stems from political tension with Trump, who has previously criticized him. The situation raises concerns about the independence of the Federal Reserve and its ability to operate free from political intimidation, igniting a broader discussion about economic policy and governance.
Federal prosecutors have opened a criminal investigation into Federal Reserve Chairman Jerome Powell, he said on Sunday.
In a video announcing the probe, Powell stated that the U.S. Justice Department served the agency with subpoenas and threatened criminal indictment over his testimony to a Senate committee regarding renovations to Federal Reserve buildings.
Powell characterized the investigation as unprecedented and expressed his belief that it resulted from political tensions with Donald Trump, particularly his refusal to lower interest rates amid the president's public pressure.
The Fed chair's situation is reminiscent of other officials who have clashed with Trump and subsequently faced scrutiny from the Justice Department.
The BBC has reached out to the Justice Department and the White House for their comments on the matter.
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, Powell expressed.
Federal prosecutors have reportedly not confirmed the investigation, but the implications of such a probe signal an escalation in conflicts between Trump and Powell, who was nominated by Trump in 2017.
Trump, while being interviewed by NBC News on Sunday, stated he had no prior knowledge of the investigation involving the Fed, but criticized Powell's performance, saying, he’s certainly not very good at the Fed, and he’s not very good at building buildings.
Powell's investigation is expected to be supervised by the U.S. Attorney's Office for the District of Columbia. North Carolina Senator Thom Tillis remarked that the inquiry raises questions about the integrity and independence of the Department of Justice, and called for a moratorium on Powell's replacement until legal matters are resolved.
Senator Elizabeth Warren voiced concerns regarding the motivations behind the investigation, suggesting an intent by Trump to replace Powell with someone more compliant with his economic agenda.
The unfolding investigation has resulted in a spike in precious metal prices, indicating a surge in market uncertainty amidst political turmoil.
