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Efforts by Trump-appointed federal prosecutors Investigate and file criminal charges Opposition to Fed Board of Governors Chairman Jerome Powell is facing strong opposition from Republicans who may run for president. Donald TrumpHe is trying to bully Powell and the central bank into artificially lowering interest rates ahead of this year’s midterm elections.
Senate Republican Majority Leader John Thune issued a tacit warning about the investigation after being asked about it.
He said any accusations against Powell “had better be true and they better be serious.”
But another senior Republican senator in the upper chamber Lisa Murkowski Alaska’s president was more critical of the administration’s recent swipe at the Fed chair.
“Now I look at the Jay Powell situation and the so-called investigation into the offices they went there to overhaul as a reason to do nothing but intimidation, threats and coercion,” she told independent. “If this is to get him out quicker, I think he’s already looking at other options that he might pursue. But when you’re pressured, when you’re threatened in this way, most of us say, ‘I’m not going anywhere.'”
Murkowski lashed out Ministry of Justice She said in a post on Monday that she had discussed with Powell the news that the Justice Department had issued a subpoena to the central bank, indicating that prosecutors were reviewing the board chairman’s testimony about a long-term renovation project that Trump and his allies say was mismanaged on his watch.
The Alaska senator’s condemnation of Powell’s shock investigation came less than a day after her Republican colleague, North Carolina Sen. Thom Tillis, issued a scathing statement denouncing the Trump administration’s “active push to end the Fed’s independence.”
“The independence and credibility of the Department of Justice are now in question,” added Tillis, who is retiring at the end of this year.
The Tar-Heels Republican, who serves on the Senate Banking Committee, also said he would refuse to vote for any of Trump’s central bank nominees until the investigation is “fully resolved,” including anyone who replaces Powell when his term as chairman expires in May.
Maine Sen. Susan Collins said she also spoke with Powell and told reporters she would review Powell’s testimony before Congress.
“However, this may be more about preserving the independence of the Fed, which I support,” Collins said.
Sen. Elizabeth Warren of Massachusetts, the ranking Democrat on the Banking Committee, also criticized the Powell investigation as an example of Trump’s “weaponizing the Justice Department in plain sight” so that he could “take over the Fed as quickly as possible so he can make political decisions that he believes will help him heading into the 2026 election.”
The Justice Department investigation, overseen by Trump ally and former Fox News host Jeanine Pirro, burst into the spotlight over the weekend after prosecutors issued a grand jury subpoena to the central bank asking Powell to testify before the Senate Banking Committee last June about renovations to the Fed’s headquarters.
Trump, who told reporters aboard Air Force One that he was unaware of the investigation until asked about it later Sunday, cited construction products as a potential reason to fire Powell and blasted $60 million in cost overruns as “really disgraceful” in an interview with reporters in July. The Fed attributes the extra spending to what has become $2.5 billion inflation plan and the need for costly asbestos abatement work that was not initially anticipated.
National Economic Councilor Kevin Hassett is one of Trump’s close allies and is considered a frontrunner to succeed Powell as Fed chairman. He told CNBC on Monday that the investigation was completely normal and similar to the work done by internal regulators such as the inspector general.
“Part of government is having people look at you … and check to see if what you’re doing is exactly the right thing. I think that’s part of government and the Fed as well,” he said.
Powell confirmed the existence of the investigation in an unprecedented videotaped statement, saying it had nothing to do with his testimony to Congress or the renovation of Fed headquarters.
“This is about whether the Fed can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will be guided by political pressure or intimidation,” Powell said.
News of the investigation into Powell is just the latest in Trump’s yearlong effort to boost the U.S. economy by slashing interest rates that have been raised for years during the Biden administration while trying to combat runaway inflation in the wake of the pandemic.
For months, Trump has been verbally attacking Powell as “too late” or worse, while frequently threatening to fire him over failed headquarters renovations.
Trump also claimed to have fired another Fed board member, Biden appointee Lisa Cook, over mortgage fraud allegations against her by Bill Pulte, the head of the Federal Housing Finance Administration.
The Supreme Court will hear oral arguments this week in a lawsuit that will decide whether Trump can oust Cook — and if the administration wins, Trump will be able to nominate his own successor to the bank’s board.
The president has publicly expressed his desire for the Federal Reserve to significantly cut overnight interest rates, which determine the cost of overnight borrowing between banks.
But Trump wants the Fed to use interest rate cuts to stimulate the economy and encourage banks to sharply lower interest rates for mortgage and credit card users, and has expressed a desire to have more control over monetary policy that has long been the exclusive purview of the Fed.
The last time a U.S. president issued a similar warning to a Fed chair was in the early 1970s, when Richard Nixon threatened then-Fed Chairman Arthur Burns to slash interest rates before his 1972 re-election campaign.
Nixon ultimately reaped the short-term benefits, scoring a historic landslide victory in 1972 over Democratic candidate George McGovern, winning 49 of 50 states, but by the end of the decade the artificial stimulus policies he championed produced devastating “stagflation” – a combination of low growth and high inflation – until the mid-1980s, under then-Chairman Paul Volckler. This phenomenon subsided only after leading central economic policies to instigate a recession. The bank raised interest rates to 20%.
Decades later, Trump’s imitation of bringing the Fed under his control — and his attacks on Powell — alarmed economists, who noted that political interference in central banks always leads to disaster.
Three of Powell’s predecessors – former Fed Chairs Janet Yellen, Ben Bananke and Alan Greenspan – and former Treasury Secretaries Timothy Geithner, Jacob Lew, Henry Paulson and Robert Rubin issued a statement on Substack denouncing the Justice Department investigation as an “unprecedented attempt to use prosecutorial attacks” to “undermine” the Fed’s independence.
“This is how monetary policy is set in emerging markets with weak institutions, and this has serious negative consequences for inflation and the functioning of the broader economy,” they said.
They added that Trump’s intended outcome of placing control of interest rates under presidential control “has no place in an America where the rule of law is its greatest strength and is the foundation of our economic success.”
Justin Wolfers, an economics professor at the University of Michigan who served as an outside adviser to former President Joe Biden’s 2020 campaign, said on MSNOW that Trump’s crusade against the Fed’s independence is “pointlessly destructive” and “a bad path” that “will not lead to anything useful for the American people or President Trump’s agenda.”
Wolfers also noted that other “populist strongmen” who control their countries’ monetary policy have suffered similarly disastrous results, pointing to the example of Turkey, where dictator Recep Tayyip Erdogan – like Trump – is “very confident, shuns all experts and believes in the value of low interest rates.”
“Well, he tried that policy. As a result, inflation in Turkey went from very normal levels to over 80%. Now it’s back down to the mid-30s. That’s a very, very bad outcome,” he said.