According to Federal Reserve Chair Powell himself on Sunday, the U.S. Department of Justice has launched a criminal investigation into his previous statements to Congress regarding the renovation of the Federal Reserve's Washington headquarters. This marks a significant escalation in Trump's actions against Powell. Powell denied any improper conduct and accused the Trump administration of "instrumentalizing" the Department of Justice, citing that he did not cut interest rates as much or as quickly as Trump had hoped.
News of the Trump administration's intensified campaign against Powell spread in Washington and beyond on Monday, with the real sense of unease seemingly not coming from financial markets, but rather from Trump's Republican Party. Early Monday morning, the markets did experience limited panic: U.S. stock indices fell briefly but began to recover during the morning session; the dollar weakened while gold strengthened. However, the market generally remained skeptical about how far this investigation and Trump's pressure tactics would go—previous market panics caused by Trump's policies had been short-lived, so its long-term impact remains unclear. The Department of Justice's action against Powell has drawn strong criticism from more and more Republicans, including senators who hold the key votes needed to confirm the next Federal Reserve Chair. This indicates that the new round of criminal investigations against Powell may be creating a rift within the Republican Party and revealing the latest signs of weakening control by Trump over his party.
According to informed sources, after the U.S. Department of Justice initiated a criminal investigation against Powell, Bessembinder called Trump late on Sunday, anxiously expressing that this federal investigation "had messed things up" and could have a negative impact on the financial markets. As mentioned above, Bessembinder's concerns were somewhat validated in the financial markets on Monday. Another concern of Bessembinder's is that Powell's chairmanship will end in May, and the Trump administration had originally hoped that Powell would resign early after the president nominated a successor. However, Powell has now decided to stand firm. On Sunday night, Trump seemed to distance himself from this investigation, stating that he had no knowledge of the court issuing a subpoena to Powell. It is expected that Trump will likely not halt the investigation, but he will also respect Bessembinder's position.
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Original article: toutiao.com/article/1854174508348426/
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