- Jerome Powell says criminal subpoenas tied to his testimony mark an “unprecedented” escalation in attacks on the Federal Reserve.
- Powell states the subpoenas are a response to the Fed setting interest rates independently, not the renovation testimony itself (statement).
- Donald Trump has denied knowledge of the subpoenas (NBC News) and has previously attacked Powell publicly (New York Times, Newsweek).
- Critics warn that political pressure on the Fed could threaten the dollar’s reserve status and U.S. Treasuries market confidence.
- Powell was first nominated by Trump and later re-nominated by Biden; his term ends in May, when a presidential successor could be appointed normally.
Jerome Powell, chair of the Federal Reserve, said on Jan. 11 that grand jury subpoenas linked to his congressional testimony represent an “unprecedented” attack on the central bank’s independence. The subpoenas concern his testimony about renovation work at Federal Reserve buildings and follow public pressure from Donald Trump.
Powell said the subpoenas are not really about the renovation testimony. In a public statement, he wrote that “This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project.”
He added that the subpoenas are tied to the Fed’s policy choices. Powell wrote, “Those are pretexts. 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 also warned the pressure campaign raises a larger question about policy independence: “whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether monetary policy will be directed by political pressure or intimidation.”
Mr. Trump has publicly attacked the Fed and Powell in recent years. He has denied knowledge of the subpoenas (NBC News), has been reported to have tried to pressure the Fed to lower rates (New York Times), and has called Powell a “numbskull” and “too stupid” (Newsweek). He has also said he could remove Powell for “fraud.”
Trump has made additional public claims about appointments and policy. He said he was surprised Powell was appointed and “frankly, that Biden put him in,” a claim reported by others (ms.now). He has also announced measures such as capping credit card rates at 10% and ordering mortgage bond purchases by government-backed firms; Bloomberg reports he falsely claimed such edicts already carry the force of law (Bloomberg).
Federal Reserve independence refers to the bank’s ability to set monetary policy without direct political control (technical term: independence means decisions on interest rates are based on economic data, not political direction). The Fed’s dual mandate is to promote stable prices and maximum employment (technical term: “dual mandate” = price stability and employment goals).
Observers warn that undermining independence could reduce confidence in U.S. Treasuries and the dollar’s role as the world reserve currency (technical term: reserve currency = a currency held by governments and institutions for international transactions and reserves).
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