Lawmakers expressed concern over the Justice Department's criminal inquiry into Federal Reserve Chairman Jerome Powell, potentially jeopardizing President Donald Trump's efforts to appoint a new central bank leader. Powell disclosed Sunday that the DOJ served the Fed with grand jury subpoenas, threatening a criminal indictment related to his testimony before the Senate last June regarding renovations on the Fed headquarters, which have experienced cost overruns.
Powell characterized the allegations as a pretext, suggesting the investigation was aimed at undermining the Fed's ability to set interest rates independently of political influence. While Trump has criticized Powell for his reluctance to cut rates for much of the past year, the president stated he was unaware of the DOJ probe.
Republican Sen. Thom Tillis, a member of the Senate Banking Committee, echoed Powell's concerns and criticized the DOJ. "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," Tillis wrote in a post on X. "It is now the independence and credibility of the Department of Justice that are in question." Tillis also stated he would not confirm anyone for the Fed until the case is resolved.
The investigation centers on Powell's testimony concerning cost overruns associated with the renovation of the Federal Reserve's headquarters. The Fed is an independent agency responsible for monetary policy, and its independence from political pressure is considered crucial for economic stability.
The Justice Department has not commented on the specifics of the investigation. The Senate Banking Committee, which oversees the Fed, is expected to hold hearings on the matter. The inquiry's outcome could have significant implications for the Fed's leadership and its perceived independence.
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Federal Reserve Chairman Jerome Powell has accused the Justice Department of launching a politically motivated criminal probe into his Senate testimony, alleging it stems from the Fed's refusal to lower interest rates as requested by the Trump administration. Powell asserts the investigation, involving grand jury subpoenas, is a threat to the Fed's independence and its ability to set monetary policy based on economic conditions rather than political pressure, emphasizing his commitment to the Fed's mandate of price stability and maximum employment. The Justice Department has not yet issued a public statement regarding the matter.
A Justice Department criminal inquiry into Federal Reserve Chairman Jerome Powell is drawing criticism from Congress, potentially jeopardizing President Trump's ability to appoint a new Fed leader. The investigation, related to Powell's testimony on Fed headquarters renovations, is viewed by some, including Senator Tillis, as an attack on the Fed's independence, with Tillis vowing to block any Fed nominees until the matter is resolved. Powell himself alleges the probe is politically motivated, aimed at influencing interest rate policy.
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