US opens criminal investigation into Fed Chair Powell
Federal prosecutors have launched a criminal investigation into Federal Reserve Chair Jerome Powell over his June testimony to Congress regarding the Fed’s $2.5 billion renovation of its headquarters in Washington, D.C.
The unprecedented action against the independent Federal Reserve prompted an extraordinary response from Powell. In a video posted Sunday night, he said the investigation is linked to his ongoing disputes with the administration over interest rate policy, News.Az reports, citing CNN.
Powell described the probe as a result of broader “threats and ongoing pressure” from the administration.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a statement late Sunday.
The probe sends a chilling message to Powell – and to whomever might next lead the Fed. President Donald Trump’s unyielding attacks on the Fed chair, whom the president has said he will not renominate, have hammered on the Fed’s traditional political independence. Trump has even said he should have a say in rate decisions.
But the criminal probe takes Trump’s fight with the Fed to a whole new level. It shows that whoever Trump selects to replace Powell at the conclusion of his term in May will face continuing pressure from the administration to lower interest rates.
Investors and economists across the globe prize the Fed’s independence. It guarantees policymakers will think of the long-term ramifications of setting monetary policy – and not short-term political whims – when steering the economy.
On Sunday, Powell directly linked the probe to the question of the Fed’s independence and its ability to set interest rates without political interference.
“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.”
Justice Department spokesperson Chad Gilmartin declined to comment on the investigation but said in a statement to CNN that the attorney general wants to “prioritize investigating any abuse of tax payer dollars.”
The White House referred CNN to the DOJ statement. In an interview with NBC News on Sunday, Trump denied knowledge of the investigation, saying, “I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings.”
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