Original Title: "The Struggle Behind the Criminal Charges: Powell's Interest Rate Dispute with Trump"
Original Author: 1912212.eth, Foresight News
On January 11, Federal Reserve Chair Jerome Powell issued a rare video statement publicly accusing the U.S. Department of Justice (DOJ) of using the threat of criminal charges to pressure the Federal Reserve into complying with former President Trump's demands regarding interest rate policy. The incident quickly became a focal point for global financial markets, raising widespread concerns about the independence of the Federal Reserve.
Powell emphasized in a statement that this threat is a "consequence" of the Fed setting interest rates based on the public interest rather than presidential preferences, calling it a naked attack on central bank independence. This incident is not isolated but rather the latest manifestation of the intertwining of politics and economics during Trump's second term.
After the event, U.S. stock index futures quickly declined, with S&P 500 futures falling more than 0.5%, and Dow Jones futures dropping 150 points during the Asian session. Spot gold rose 1.88%, while spot silver surged approximately 4%. In the cryptocurrency market, BTC continued to fluctuate around $91,000.
Trump has repeatedly expressed dissatisfaction with Powell's "slow rate cuts."
Powell was appointed as the Chair of the Federal Reserve by then-President Trump in 2018 and was reappointed in 2022, with his term originally set to end in May 2026. As the leader of the Federal Reserve, Powell guided the central bank through the challenges of the COVID-19 pandemic, economic recovery, and high inflation. His policies are known for being data-driven and characterized by gradual adjustments.
However, after winning the 2024 election, Trump returned to the White House and quickly turned his attention to the Federal Reserve. He has long criticized Powell for being "slow-moving," especially regarding interest rate policy. Trump repeatedly publicly called on the Fed to significantly cut interest rates to stimulate economic growth and stock market performance. During his campaign, he even pledged to "take control" of the Federal Reserve to advance his "America First" economic agenda.
The incident's spark originated from a $250 million renovation project at the Federal Reserve's headquarters in Washington. Initiated several years ago to update aging facilities, the project has sparked controversy due to cost overruns and issues of transparency.
In July 2025, Republican representative Anna Paulina Luna accused Powell of giving false testimony to Congress regarding the program and called for a criminal investigation. At the time, the accusation did not immediately escalate, but after Trump took office, the Department of Justice quickly became involved. On January 11, 2026, multiple media outlets reported that the U.S. Attorney's Office for the District of Columbia officially launched a criminal investigation into Powell, focusing on whether Powell had misled Congress and whether the use of program funds violated any regulations. A grand jury has issued subpoenas requesting the Federal Reserve to provide relevant records.
On January 12, according to NBC, Trump said during a phone interview that he knew nothing about the investigation by the Department of Justice, and again criticized Powell. "I know nothing about it, but obviously he's not doing a good job at the Fed, and he's not doing a good job in building either," he said. When asked how he would respond to Powell's claim that subpoenas were a form of government pressure to lower interest rates, Trump said, "No, I wouldn't even consider it that way. The reality of high interest rates is what should be pressuring him. That's the only pressure he should be facing."
In a video statement, Powell openly linked the matter to interest rate policy. He pointed out that the Department of Justice's actions were "unprecedented," aiming to pressure the Federal Reserve into lowering interest rates through criminal threats to accommodate Trump's demands. In his statement, Powell reiterated that the Fed's statutory mandate is to maintain price stability and maximize employment, not to yield to political pressure. He described the incident as an "overt assault on the Fed's independence," and suggested it was a continuation of the Trump administration's pressure on the central bank.
As early as Trump's first term, Powell had clashed with the White House over his refusal to sharply cut interest rates, prompting Trump to publicly label him an "enemy." The timing of this investigation is particularly sensitive: the Federal Reserve recently kept its benchmark interest rate within the range of 4.25%-4.5%, significantly higher than the level Trump has desired.
The latest data from Polymarket shows that the market's betting on the Federal Reserve maintaining its stance in January has risen to 96%.
Supporters on X view him as a hero defending independence, while opponents criticize the Federal Reserve for "undermining the economy." Some netizens argue that "abolishing the Federal Reserve would be the right path," while others believe this could trigger a constitutional crisis.
The investigation was authorized by newly appointed U.S. Attorney Jeanine Pirro, a staunch ally of Trump, further deepening concerns about political interference.
Bowe responded by stating that the Federal Reserve would fully cooperate with the investigation but would not allow it to influence monetary policy decisions. The roots of this incident can be traced back to the Federal Reserve's institutional design. Established in 1913, the Fed was intended to be independent from politics, yet there have been historical precedents of presidential interference, such as the shadow of the Watergate scandal during the Nixon era. This incident marks an extension of Trump's "deregulation" agenda, as he has pledged after taking office to restructure federal agencies, including diminishing the Federal Reserve's authority.
As of January 12, the investigation remains in its preliminary stages, with prosecutors repeatedly requesting documents, and the White House has remained silent. Analysts predict that if the investigation escalates, the Federal Reserve may be forced to accelerate interest rate cuts to ease the pressure, but this could trigger a rebound in inflation and affect U.S. economic growth.
Powell himself may face personal risks: if the charges are proven, he could be forced to resign or even face imprisonment, although legal experts consider the evidence to be weak.
Powell has actively responded through public statements. Moving forward, in addition to hiring a lawyer to challenge the subpoena's validity, he may also appeal to the court or seek assistance from legislators from both parties, especially those who are concerned about the independence of the Federal Reserve.
Hassett and Waller Emerge as Top Contenders for Fed Succession
The criminal charges against Powell have heightened market uncertainty. After the incident came to light, investors expressed concerns that the Federal Reserve's independence could be compromised, leading to disorderly policy decisions. Powell emphasized in his statement that the threat of criminal charges would "undermine" the central bank's credibility and potentially push up risk premiums.
Secondly, this event was seen as a signal of Trump consolidating power, triggering a strong backlash from Democrats and social groups. Democratic lawmakers referred to it as a "constitutional crisis," expressing concerns that the Department of Justice was being weaponized for political retaliation.
The latest speculation about the Federal Reserve's leadership suggests that although Powell's term runs until May 2026, criminal investigations have accelerated discussions about his successor. Trump has stated he will announce his nominee before the end of the month.
According to the latest data on Polymarket, the market is betting that Kevin Warsh and Kevin Hassett are the most likely candidates, with probabilities of 43% and 39%, respectively. Warsh was nominated by President Bush in 2006 as a member of the Federal Reserve Board and became the youngest member at that time. He is known for his hawkish stance but is also pro-market. In 2017, Trump considered Warsh for the position of Federal Reserve Chair, but ultimately chose Powell.
Hassett is a well-known conservative economist in the United States and currently serves as the Director of the National Economic Council in the White House. He previously held the position of Chairman of the Council of Economic Advisers and supports low interest rates and Trump's economic agenda. In November 2025, he is considered the top candidate for the next chair of the Federal Reserve by Trump and his advisory allies.
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