Jerome Powell, Chair of the U.S. Federal Reserve (Fed), disclosed that he is the target of a criminal investigation by the U.S. Department of Justice, an unprecedented event in the country’s financial history. Prosecutors have issued subpoenas for witnesses and documents and threatened to charge him criminally over his testimony to the Senate committee regarding the renovation of the Federal Reserve’s office building.
In a video statement, Powell said the investigation results from the anger of President Donald Trump, who was displeased that Powell refused to lower interest rates as ordered, despite heavy pressure from the White House.
“This is a test of whether the Fed will continue to maintain its independence in setting interest rates according to economic conditions or whether monetary policy will have to yield to threats and political pressure,” Powell said, emphasizing that no one is above the law but that this action must be viewed in the context of ongoing intimidation from the administration.
President Trump stated in an interview that he was unaware of the Department of Justice investigation but harshly criticized Powell, saying, “He has not done a good job at the Fed, and he has also done poorly regarding the building construction.”
Media reports indicate the case will be handled by the U.S. Attorney’s Office in Washington, D.C. Investment analysts suggest the pressure may be unjustified since the Fed has not ignored interest rate policies.
News of the Fed Chair’s investigation, combined with unrest in Iran, caused gold prices on Monday (12 Jan) to surge 1.4% to $4,572.36 per ounce, at one point reaching an all-time high of $4,600.33. Similarly, silver hit a record $84.58 per ounce.
Politicians and analysts expressed concern. Republican Senator Tom Tillis said he would oppose appointing anyone to replace Powell until the case concludes to protect the Fed’s independence. Meanwhile, Democratic Senator Elizabeth Warren claimed Trump is trying to remove Powell to install a “puppet” to take full control of the Federal Reserve.
This is not the first time the Trump administration’s justice department has investigated political opponents. Previously, criminal cases against New York Attorney General Letitia James and former FBI Director James Comey were dismissed by courts. There was also an attempt to remove Lisa Cook from the Federal Reserve Board, with that case now set for Supreme Court consideration this month.
,SourceBBC