The Federal Reserve has shifted its long-standing strategy of avoiding conflict with former President Donald Trump, now adopting a more confrontational stance in response to recent developments. This change in approach follows the revelation of a criminal investigation into whether Fed Chair Jerome H. Powell misled Congress, as reported by The New York Times on Sunday.

For years, the Fed, under Powell's leadership, had attempted to navigate Trump's frequent criticisms and actions, including an executive order aimed at increasing presidential control over the Fed's oversight of Wall Street and attempts to remove a member of the Board of Governors. The central bank's strategy involved, at times, accommodating the administration's preferences on issues such as climate change and bank regulation, while steadfastly protecting its independence in setting interest rates.

However, the criminal investigation appears to have crossed a line, prompting the Fed to abandon its cautious approach. According to Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund, "Trump is now exercising the nuclear option, so there is no longer a reason for Powell not to speak his mind."

The shift in strategy comes at a critical juncture, as the outcome of this conflict could significantly impact the Fed's autonomy. The central bank's independence is seen by many economists as crucial for maintaining stable monetary policy and insulating it from short-term political pressures.

The investigation and the Fed's response are unfolding against a backdrop of heightened political scrutiny of the central bank's role in the economy. The Fed's decisions on interest rates and other monetary policy tools have significant implications for inflation, employment, and economic growth, making it a frequent target of political debate.

The specific details of the criminal investigation remain unclear. The New York Times reported that the investigation is focused on potential misstatements made by Powell to Congress. The Fed has not yet issued an official statement regarding the investigation.

The coming weeks and months are likely to see further developments in this situation, with potential implications for the Fed's operations and its relationship with the executive branch. The extent to which the Fed will actively challenge Trump's actions remains to be seen, but the shift in strategy signals a new phase in the ongoing tension between the central bank and the former president.