Federal Reserve Chair Powell publicly links his criminal investigation by the U.S. Department of Justice to his refusal to cut interest rates according to President Trump’s wishes, emphasizing that the Federal Reserve should base its monetary policy on economic data rather than political pressure. This statement has once again sparked widespread concern over whether the independence of the U.S. central bank is being eroded.
(Background: Powell once said, “Unless I die,” he would never resign early— the last bastion of Fed independence)
(Additional context: The story of Trump pressuring Fed Chair Powell: The global easing triggered by Fed renovations)

Table of Contents

• Powell: The investigation is the “cost of disobedience”
• Trump’s pressure tactics continue to escalate
• Red flag for central bank independence

The Federal Reserve (Fed) Chairman Jerome Powell recently publicly connected his criminal investigation to political factors. He stated that the criminal probe by the Washington D.C. federal prosecutor into the Fed headquarters renovation is actually a “consequence” of his refusal to cut interest rates according to President Trump’s wishes.

Powell: The investigation is the “cost of disobedience”

In a statement, Powell explicitly said that the investigation is “the result of the Federal Reserve setting interest rates based on what is most beneficial for the public, rather than complying with the President’s preferences.” He further pointed out that the core issue of the investigation revolves around “whether the Federal Reserve can continue to set interest rates based on evidence and economic conditions — or whether monetary policy will be influenced by political pressure or intimidation.”

According to reports, the Department of Justice’s investigation appears to focus on the Fed headquarters renovation project and whether Powell misled Congress about the project’s scope. However, Powell’s latest response clearly hints that he believes there are deeper political motives behind the investigation.

Trump’s pressure tactics continue to escalate

Trump’s pressure on the Federal Reserve is no longer news. Over the past few months, Trump has repeatedly criticized Powell and the Fed’s interest rate decisions publicly, and threatened legal action over the headquarters renovation issue. More notably, Trump attempted to dismiss Fed Governor Lisa Cook, but this move was blocked by the Supreme Court.

Powell’s term will expire in May 2026, and Trump has already begun scouting potential successors.

Currently, Trump’s economic advisor Kevin Hassett is considered a leading candidate to succeed Powell. However, Hassett has publicly stated that even if he becomes Fed Chair, Trump’s views on interest rates “will not influence Fed decisions in any way.”

Red flag for central bank independence

Powell’s recent remarks have once again brought the issue of Fed independence into focus. Traditionally, central bank independence from political influence is seen as a cornerstone for maintaining monetary policy credibility. If markets perceive that Fed decisions are influenced by politics, it could trigger chain reactions such as runaway inflation expectations and reduced predictability of interest rate policies.

For the cryptocurrency market, Fed policy uncertainty is also a key variable. If the Fed is forced to accelerate rate cuts under political pressure, it could temporarily boost risk assets; but in the long run, damage to the central bank’s credibility might lead to more severe market volatility.

As Powell’s term enters its final phase, the power struggle between the Fed and the White House is likely to intensify. This contest over U.S. monetary policy independence will be one of the most closely watched issues in global financial markets in 2026.