The incident on January 12th was absolutely surreal! Fed Chairman Powell directly responded to the criminal investigation, stating that the U.S. Department of Justice delivered a subpoena last Friday, threatening to prosecute him over his congressional testimony regarding the Federal Reserve's headquarters renovation last June—but he clearly said this is just a pretext!
I think at the heart of this matter is a show of force. Powell has already revealed the real reason: the Fed didn't follow Trump's wishes to drastically cut interest rates, instead sticking to economic data when setting rates and refusing to be swayed by political pressure. The fact is, the Federal Reserve headquarters renovation went over budget due to rising material costs, and Powell himself admitted this last year—so the claim of 'perjury' is nothing but a pretext.
This is unprecedented. The independence of the Federal Reserve has always been the anchor of financial markets. Now, using judicial pressure to force compliance is essentially trying to make the central bank bow to political demands. Powell said he will continue to perform his duties fairly. I believe this struggle isn't just about him personally—it's about whether U.S. monetary policy will be steered by politics, and the market is likely to be anxious in the aftermath!
I think at the heart of this matter is a show of force. Powell has already revealed the real reason: the Fed didn't follow Trump's wishes to drastically cut interest rates, instead sticking to economic data when setting rates and refusing to be swayed by political pressure. The fact is, the Federal Reserve headquarters renovation went over budget due to rising material costs, and Powell himself admitted this last year—so the claim of 'perjury' is nothing but a pretext.
This is unprecedented. The independence of the Federal Reserve has always been the anchor of financial markets. Now, using judicial pressure to force compliance is essentially trying to make the central bank bow to political demands. Powell said he will continue to perform his duties fairly. I believe this struggle isn't just about him personally—it's about whether U.S. monetary policy will be steered by politics, and the market is likely to be anxious in the aftermath!