Powell Defends Fed Independence Amid Probe

Powell engaged in 13 calls with U.S. lawmakers after disclosing a DOJ investigation into his statements to Congress. These calls, each lasting 10-15 minutes, occurred after Powell labeled the DOJ's subpoenas as "pretexts" for political pressure on the Fed. The DOJ probe reportedly revolves around Powell's testimony regarding a $2.5 billion building renovation project at the Fed's headquarters. Trump allies had previously accused the Fed of mishandling the renovations. Powell's actions are seen as defending the Fed's independence against potential political influence, particularly regarding interest rate decisions. He stated the threat of criminal charges was a consequence of the Fed setting rates based on economic assessment rather than presidential preference. This situation unfolded amidst the Trump administration's push for "fiscal-led QE," where government-sponsored enterprises would purchase billions in mortgage-backed securities to lower mortgage rates. Powell has warned that such measures could be inflationary, signaling a conflict over monetary policy. Some lawmakers, like Senators Murkowski and Kennedy, voiced support for Powell and criticized the DOJ investigation. However, Senator Tillis threatened to block Fed nominations until the probe concludes.