Powell Accuses Trump of Using DOJ Against Fed, Lawmakers Rally Behind Chair

Federal Reserve Chairman Jerome Powell has issued a striking warning that the Trump administration is using the Department of Justice to pressure the central bank, accusing the president of weaponising the legal system to influence monetary policy.

Powell's intervention marks an extraordinary escalation in tensions between the White House and the Fed. His remarks, delivered in a video message on Sunday, cast the criminal investigation into his testimony and the renovation of Fed buildings as a pretext for undermining monetary policy. The confrontation has sparked alarm among lawmakers and economists, who fear lasting damage to the institution's credibility.

Powell Denounces Unprecedented Legal Threats

Powell, in a video statement on Sunday, revealed that federal prosecutors had served subpoenas to the Fed and threatened a criminal indictment over his Senate testimony concerning the renovation of Federal Reserve buildings.

'This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. Those are pretexts,' Powell said, emphasising that the real issue is the Fed's ability to set interest rates independently. 'This 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.'

Lawmakers Stand Firm Behind Powell

Lawmakers across party lines have rallied behind Powell, framing the investigation as a dangerous attempt to undermine the independence of the central bank. Experts warn that allowing political pressure to dictate interest rate decisions could have devastating consequences for the US economy.

Peter Conti-Brown, a Federal Reserve historian at the University of Pennsylvania, described the inquiry as 'a low point in Trump's presidency and a low point in the history of central banking in America.' He added, 'Congress did not design the Fed to reflect the president's daily fluctuations, and because the Fed has rebuffed President Trump's efforts to take the Fed down, he is launching the full weight of American criminal law against its Chair.'

Powell, who has served as Fed chair under four administrations, stressed his commitment to public service and integrity, saying, 'I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.'

Trump Denies Knowledge, Criticises Powell

In interviews following Powell's statement, Trump denied any prior knowledge of the investigation. He also criticised Powell's leadership of the Fed and the renovations that sparked initial scrutiny. 'I don't know anything about it, but he's certainly not very good at the Fed, and he's not very good at building buildings,' Trump said in an interview with NBC News.

Legal experts note that the president can only remove a Fed chair 'for cause,' typically defined as serious misconduct rather than policy disagreements. Powell's continued term on the Fed board until January 2028 further limits Trump's influence over the institution, delaying his opportunity to appoint a replacement on the seven-member board.

Markets React Calmly Amid Political Storm

Financial markets have shown only mild reactions to the escalating feud. US stock futures fell slightly, with the S&P 500 dipping more than 0.4 percent in early Asian trading. The dollar weakened by roughly 0.2 percent against major currencies, signalling cautious investor sentiment rather than panic.

Analysts suggest that Powell's firm stance may actually strengthen his position. Mark Spindel, chief investment officer at Potomac River Capital, said, 'He is an institutionalist, and will defend its independence as he sees it. I'm asking myself, "Does this pressure make him rethink leaving?"' Powell is due to step down as chair in May but could remain on the Fed board for several more years, maintaining continuity and independence at a critical moment.

Fed Independence Under Threat

The investigation highlights the ongoing tension between the executive branch and the Fed, which was deliberately insulated from political control to preserve sound monetary policy. Critics argue that Trump's repeated pressure to lower interest rates disregarded the central bank's mandate to ensure price stability and maximum employment.

David Wilcox, a senior fellow at the Peterson Institute for International Economics, remarked, 'The legislative architects of the modern Fed meant to allow the Fed to set monetary policy one step removed from political control, and, so far, their safeguards have stood up under pressure. In response, the president has resorted to increasingly outlandish tactics. This one is the most extreme example yet.'

Powell's bold public statement signals a clear defence of institutional independence, warning that politicising interest rate decisions could have long-term consequences for the US economy.

As the feud unfolds, lawmakers and financial experts alike are watching closely, concerned that precedent-setting pressure on the Fed could reshape American central banking for years to come.