Fed Independence Questioned as DOJ Investigates Chair Powell
Federal prosecutors are investigating Federal Reserve Chair Jerome Powell over the costly renovation of the Fed’s headquarters, a move that has sharply escalated his long-running conflict with President Donald Trump.
Powell and the Federal Reserve confirmed the inquiry and called it a “pretext,” warning it threatens the central bank’s independence. Former Fed chairs Janet Yellen, Ben Bernanke, and Alan Greenspan condemned the investigation as an unprecedented attempt to undermine the Fed’s ability to set interest rates free from political pressure. Trump has denied any role in the Justice Department’s probe, which reportedly centers on whether Powell misled Congress about renovation costs that rose from $1.9 billion to $2.5 billion.
The investigation has intensified concerns about political interference as Powell’s term as chair nears its May expiration and Trump considers a successor. Republican senators Thom Tillis and Lisa Murkowski said they will block any Fed nominations until the matter is resolved, citing risks to economic stability and market confidence. Financial markets reacted with a moderate sell-off, higher volatility, and rising gold prices, reflecting investor unease, though some analysts said Powell’s pushback against the probe could ultimately reassure markets by signaling continued resistance to political pressure on the Fed.
Duke University economist Michael Munger joins the Kendall and Casey Show to provide insight on the US economy and the impact of the investigation.
