Federal Reserve Chair Jerome Powell confronted allegations from the Department of Justice (DOJ) that the central bank could face "criminal indictment" concerning his testimony before Congress, specifically related to the $2.5 billion renovation of the Fed's headquarters. In a statement released on Sunday, Powell dismissed these allegations as mere pretexts that obscure the larger dispute over who controls the nation's monetary policy.
This development represents a significant escalation in the ongoing conflict between the Trump administration and the Federal Reserve. Over several months, the central bank has endured sustained criticism from President Donald Trump, primarily focused on the Fed's reluctance to aggressively lower interest rates. The President's public calls for Powell's dismissal have further heightened pressures that threaten the institution's longstanding independence.
In response, Powell emphasized his respect for the rule of law and accountability within the democratic framework but described the recent DOJ moves as "unprecedented." He urged the public to interpret the threat of criminal charges within the broader context of increased threats and pressure directed at the Fed administration in recent months.
Powell clarified that the core issue at hand is not budgetary or procedural concerns about the renovation but rather the Federal Reserve's autonomous role in setting interest rates. He described the possibility of criminal charges as a consequence of the Fed's decisions being guided by economic assessments aimed at serving public interest rather than aligning with presidential preferences.
Highlighting the confrontation's significance, Powell framed the dispute as a fundamental question: whether the Federal Reserve can continue to base its policy decisions strictly on empirical evidence and economic conditions or if its autonomy will be compromised by political intimidation or influence.
Despite the pressures, Powell reaffirmed his dedication to his responsibilities, noting his tenure under multiple administrations and pledging to fulfill his duties "with integrity and a commitment to serving the American people."
Market reactions to this political friction have been evident, with investors gravitating toward hard assets amid concerns over the Fed's independence. Gold futures for February delivery surged by 1.95%, reaching $4,588.29 per ounce, while silver futures for March delivery increased 5.14%, trading at $83.36 per ounce.
Conversely, equity futures showed declines: Dow Jones futures decreased by 0.44% to 49,505, Nasdaq futures dropped 0.71% to 25,755 points, and the S&P 500 futures fell 0.47% to 6,972 points. These movements reflect investor unease in response to the political uncertainties surrounding monetary policy.