Powell may miss congressional hearings, Federal Reserve independence crisis accelerates heating up

Republican Congressman Hill believes that Federal Reserve Chair Jerome Powell may not testify before Congress in February. This seemingly routine absence, however, masks an escalating political storm facing the Federal Reserve. Currently, Powell is caught in a triple bind involving a criminal investigation by the Department of Justice, ongoing pressure from Trump, and a crisis of market confidence. His absence from the hearing may not be accidental but could be another signal of the crisis over the Fed’s independence.

Dilemma in the Political Storm

Why might he be absent?

Powell’s predicament is multi-dimensional. According to the latest reports, the Department of Justice has launched a criminal investigation into him, related to the renovation project at the Fed headquarters. Powell has openly described this as a “political trap” orchestrated by the Trump administration to interfere with monetary policy. Against this backdrop, attending the congressional hearing is fraught with risks:

• Defending himself could be seen as responding to political accusations, further escalating conflicts
• Remaining silent might be interpreted as endorsing the charges or shirking responsibility
• Whatever approach he takes, it could serve as leverage for Trump’s continued pressure

Congressman Hill’s view likely reflects this political reality: in the current environment, Powell’s attendance at the hearing carries too high a cost.

Timeline of Background Events

Substantive Crisis of the Fed’s Independence

This is not just Powell’s personal dilemma but a fundamental test of the Fed’s independence. Mohamed El-Erian, Chief Economic Advisor at Allianz, bluntly states that the current situation has further weakened the already fragile public trust in the Fed.

Deeper implications of the crisis

• Political interference in monetary policy: The Trump administration has exerted pressure on the Fed to cut rates through legal means, breaking historical norms
• Questioning of independence: Markets are beginning to worry whether the Fed can still set policy independently or if it is driven by political pressure
• Market confidence shaken: Investors are pricing this risk into safe-haven assets; gold has risen to $4,600 per ounce for the first time, and Bitcoin has also experienced volatility

Market reactions best illustrate the issue. When the Fed’s independence is questioned, investors’ first response is to flee to gold and other safe assets. This indicates that the market has recognized that future monetary policy may be more influenced by political factors than by economic fundamentals.

Succession Race and Policy Outlook

Powell’s term will end on May 15. Trump has already begun interviewing candidates such as Larry Fink, CEO of BlackRock. Fink’s stance is notably different from Powell’s; he advocates for lowering rates to 3%, aligning more closely with Trump’s desire for rate cuts.

This means that whether Powell attends the February hearing or not, his influence over the Fed is gradually waning. The choice of the next chair will determine the future direction and independence of the Federal Reserve.

Implications for the Cryptocurrency Market

This Fed crisis has a direct impact on the crypto market. During this period, Bitcoin briefly fell to $90,000, then rebounded to $91,000, with a gain of only 1.7%. Analysts note that traders are already viewing this event as “background noise,” but this calm may be the calm before the storm.

The weakening of the Fed’s independence is, in the long term, positive for safe-haven assets like Bitcoin. However, in the short term, market uncertainty could lead to increased volatility.

Summary

Powell’s possible absence from the February hearing reflects an escalation of the political storm facing the Fed to an unmanageable level. This is not just an individual’s dilemma but a substantive crisis of the Fed’s independence. The market has already priced this risk into safe assets. In the coming months, Powell’s future, the selection of his successor, and the policy shifts of the Fed will be key variables influencing global financial markets. For crypto investors, market volatility during this period is normal; the key is to understand the underlying political and economic logic rather than be misled by short-term price fluctuations.