Financial markets have been rattled by a severe escalation in the conflict between the White House and the Federal Reserve, following reports that the Trump administration is preparing to indict Chair Jerome Powell. The potential criminal charges reportedly stem from Powell’s testimony regarding cost overruns for renovations at the Fed’s Washington headquarters, though the Chair insists the move is deeply politically motivated.
Okay News reports that Powell disclosed the threat of legal action on Sunday night, describing it as a “pretext” designed to force the central bank to align with the President’s economic preferences. He asserted that the administration is using the threat of prosecution to intimidate monetary policymakers into setting interest rates based on political pressure rather than economic data and the public interest.
The news sent immediate shockwaves through global finance, with the US dollar weakening and gold prices hitting a new record high above $4,600 an ounce as investors fled to safe havens. The standoff comes just months before Powell is scheduled to step down in May, raising concerns that the administration is attempting to dismantle the Federal Reserve’s traditional independence before nominating a successor.
In a defiant statement, Powell maintained that public service requires standing firm against intimidation, emphasizing that the subpoena regarding the $2.5 billion renovation project is merely a vehicle for the administration’s broader grievances over the pace of interest rate cuts. This development coincides with another legal battle involving the attempted firing of Fed governor Lisa Cook, which is set to be argued before the Supreme Court in two weeks.
Market analysts warn that this unprecedented move could have severe unintended consequences for the US economy. Experts suggest the administration’s aggressive tactics are intended to signal to future policymakers that the White House expects control over interest rates, a strategy that has drawn sharp criticism from some Republican senators who have vowed to block any new nominee until the legal proceedings are resolved.
