Powell reacts to the White House and exposes unprecedented political pressure on the Federal Reserve

President of the Fed says that the Trump government threatened to charge him criminally After years of clashes between the government of Donald Trump and the Federal Reserve (Fed, the central bank of the United States), a period in which Jerome Powell maintained a cautious stance and avoided public confrontations, the president of the institution decided to react last Sunday (11). Powell said the Justice Department served the Fed with grand jury subpoenas and threatened to file criminal charges related to his Senate testimony last year about the renovation of historic Fed buildings. 📱Download the g1 app to see news in real time and for free For the leader, who has come under pressure since Trump’s return to power, the measure is not supported by either the content of the project or the oversight role of Congress. According to him, this is an escalation of political pressure with the aim of embarrassing the central bank and influencing the conduct of US monetary policy, especially with a view to accelerating interest rate cuts. “I have deep respect for the rule of law and accountability in our democracy. No one — certainly not the Fed chairman — is above the law. But this unprecedented action must be seen in the broader context of the administration’s ongoing threats and pressure,” said Powell, who leaves office in May at the end of his term. This Monday, the White House reported that US President Donald Trump did not order any investigation against the director of the American Central Bank. Understand what is at stake in Trump’s new offensive against the Fed president Powell’s reaction Jerome Powell’s statements signal an important change in the relationship between the Federal Reserve and the White House. For the first time since taking command of the central bank, in 2018, the director publicly attributed to the presidential administration an attempt to interfere in the conduct of monetary policy through legal mechanisms. In doing so, Powell went beyond a simple response to an investigation and framed the episode as an institutional clash over who should define the direction of the American economy. According to him, the Trump government’s conduct is “unprecedented” and raises a warning about the risk that decisions regarding interest rates will be taken under political pressure, instead of being based on economic criteria and evidence. “This is about whether the Fed can continue to set interest rates based on data and economic conditions — or whether monetary policy will be driven by political pressure or intimidation,” he said. The statement comes amid an already deteriorated relationship between Powell and Trump, who since returning to the White House has intensified criticism of the conduct of monetary policy. Trump has demanded more intense interest rate cuts, holding the Fed responsible for, in his view, restricting economic growth. Over the past few months, the Republican has even publicly considered Powell’s removal from office, despite the legal protections surrounding the central bank head’s mandate. Donald Trump and head of the FED, Jerome Powell, on July 24, 2025 REUTERS Renovations at the Fed building The episode involving the renovation of the Fed buildings has become, in this context, a new point of friction. The project, which involves the modernization of old infrastructure, was questioned by members of the Trump administration, who began to describe it as excessively expensive. Powell repeatedly explained to Congress that these were necessary updates and stated that the Fed kept lawmakers informed through testimony and official communications. Still, according to the Fed president himself, the issue was used as a justification to increase political pressure on the institution. “These accusations are not related to congressional oversight,” he said, reinforcing that the threat of criminal charges must be interpreted within a broader context of attempts to influence interest rate policy. Until then, Powell had limited himself to reaffirming, in a generic way, the importance of the central bank’s independence, avoiding responding directly to attacks from the Executive. Threat to the Fed generates reactions The repercussions were felt on Wall Street. This Monday, the Dow Jones fell 0.12%, while the S&P 500 advanced 0.07% and the Nasdaq rose 0.33%. In exchange, the global dollar lost strength: the index that measures the currency against a basket of currencies fell 0.37%, to 98.87. Gold — a traditional protective asset — advanced 2.38%, to US$4,617 per ounce. According to Reuters, Goldman Sachs chief economist Jan Hatzius said today that the threat of a criminal charge against Powell reinforces concerns surrounding the independence of the American central bank. At a bank event in London, he assessed that the news intensifies the institutional debate. Hatzius, who sits on Goldman Sachs’ management committee, made the first public statements from a senior Wall Street executive since reports of the Fed chairman’s possible investigation emerged. “I have no doubt that he (Powell), in his remaining term as chairman, will make decisions based on economic data and will not be swayed one way or another by cutting further or refusing to cut based on data that could lead in that direction,” Hatzius said. The tension also provoked a rare public reaction from former members of high-ranking US economic officials. In a joint statement, former Fed chairs and former Treasury secretaries called the investigation an unprecedented attempt to undermine the central bank’s autonomy. The group warned that the use of criminal attacks against monetary authorities is characteristic of countries with fragile institutions, and tends to produce negative consequences for inflation and the functioning of the economy. “The independence of the Federal Reserve and the public perception of that independence are critical to economic performance, including achieving the goals set by Congress for the Federal Reserve of stable prices, full employment, and moderate long-term interest rates,” the signatories say. White House denies investigation Amid the repercussions of the episode, the White House denied that the Trump administration had directed the Department of Justice to investigate the president of the Federal Reserve, Jerome Powell. Questioned by reporters, press secretary Karoline Leavitt stated that the president did not order any investigation into an alleged deception to Congress in testimony related to the renovation of the Fed headquarters complex in Washington. File photo: US President Donald Trump observes Jerome Powell, his nominee to chair the Federal Reserve (Fed), during a speech at the White House, in Washington, USA, on November 2, 2017. REUTERS/Carlos Barria/File photo

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