The leadership of the US Federal Reserve has united against President Donald Trump's attacks after the Justice Department launched a criminal investigation into Federal Reserve Chairman Jerome Powell, the Financial Times reports.
Current and former Federal Reserve officials, including Janet Yellen, Ben Bernanke and Alan Greenspan, condemned the Justice Department's actions, calling them an attempt to undermine the regulator's independence. "People who work at the Federal Reserve see this as a really troubling development and see it as an attempt by Trump to gain control of monetary policy," Yellen said.
The newspaper's sources suggested that Trump's pressure could backfire and persuade Powell to stay on the Fed until the end of his term, which ends in May 2026, but he would remain on the Fed board until January 2028.
Former senior Fed official David Wilcox suggested that the investigation into Powell was announced now in an attempt to intimidate the chairman and his colleagues. "The problem for the president is that Powell is not easily intimidated. "It's not in his nature," he said.
Wilcox had previously thought Powell would leave the Fed in May, but now, he said, the likelihood of that happening "has dropped to about zero."
Trump has long criticized Powell for his refusal to significantly lower interest rates, calling him an "idiot" and "stubborn." In January, an investigation was launched into the Fed chairman over Powell's testimony to Congress about a $2.5 billion renovation of the Fed's headquarters. Powell himself believes that the case was provoked by the Federal Reserve's monetary policy, which "is not based on the president's preferences."
Two Republican senators, Tom Tillis and Lisa Murkowski, have already announced that they will not support Trump's nomination for Federal Reserve chairman while the investigation against Powell is ongoing. Treasury Secretary Scott Besant also expressed dissatisfaction with the actions of the Justice Department, believing that the decision will negatively affect the markets. He previously warned Trump that firing Powell would increase volatility in financial markets.