Central Bank Independence in Focus Amid Rising Political Pressure
Federal Reserve Chair Jerome Powell has publicly linked a newly launched criminal investigation by the U.S. Department of Justice to his continued refusal to lower interest rates, framing the move as a direct challenge to central bank independence. The remarks intensify tensions between the Federal Reserve and President Donald Trumpâs administration.
Powell stated that the investigation is âa consequence of the Federal Reserve setting interest rates based on economic evidence rather than presidential preferences.â The probe reportedly centers on renovations to the Federal Reserveâs headquarters and whether Powell misrepresented project details during congressional testimony.
The chair emphasized that while accountability and the rule of law are essential, the investigation must be viewed within the broader context of ongoing political pressure and public threats aimed at influencing monetary policy.
Powell said on Sunday that;
President Trump has repeatedly criticized the Fed for not cutting rates and has openly threatened legal action and dismissal of senior officials. Although prior efforts to remove Fed leaders have faced legal obstacles, the administration has gradually increased its influence through new appointments.
Powell warned that the case raises a fundamental question: whether interest rates will continue to be set based on economic conditions, or instead shaped by political intimidation.
With Powellâs term ending in May, several potential successors viewed as more aligned with rate-cut policies have emerged, fueling uncertainty over the Fedâs future direction.The dispute underscores growing concerns that political pressure could erode the Federal Reserveâs independence, a cornerstone of U.S. monetary stability.
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