Federal Reserve Chair Jerome Powell said a Justice Department investigation should be viewed in the context of mounting political pressure over the Fed’s interest rate independence.
Federal Reserve chair Jerome Powell has blasted the Trump administration over a new criminal investigation, arguing it’s the latest attempt to destroy the central bank’s independence on interest rates.
Powell on Sunday that the investigation 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.”
The US attorney for Washington, DC, opened a criminal investigation into Powell on Friday over the agency’s renovation of its headquarters and whether Powell lied to Congress about the size of the project, The New York Times on Sunday.
President Donald Trump has repeatedly attacked Powell and the Fed for refusing to grant his demands to .
Trump has long threatened legal action over renovations to the Fed building and has said . He sought to remove Fed governor over accusations of mortgage fraud, but the Supreme Court later blocked the move.
“I have deep respect for the rule of law and for accountability in our democracy. No one — certainly not the chair of the Federal Reserve — is above the law,” Powell said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
Powell, whose term as Fed chair ends in May, said the criminal probe “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.”
Trump has denied knowing anything about the Justice Department’s probe.
“I don’t know anything about it,” he NBC News on Sunday on Powell. “But he’s certainly not very good at the Fed, and he’s not very good at building buildings.”
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Trump has lined up a series of loyalists to potentially replace Powell, many of whom have said they’d cut rates.
, a key economic adviser to Trump, is widely considered to be the frontrunner to replace Powell and has said Trump’s views on interest rates will hold “no weight” on agency decisions.
The Trump administration has already scored a win with the Fed, having installed Stephen Miran, a close Trump ally and economic adviser, to the board of governors last year. Miran sought 0.5% interest rate cut at his first Fed meeting in December.
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