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Tag: Jerome Powell

  • ‘I just don’t have a good feeling about this’: Top economist Claudia Sahm says the economy quietly shifted while policymakers wait for the wrong alarm | Fortune

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    Analysts’ favourite gauge of the U.S. economy’s health comes from data. And at the moment, the numbers look OK … ish. Hiring is down, but unemployment hasn’t spiked, inflation isn’t ballooning (as feared) because of tariffs, and consumer spending is holding up remarkably well.

    Economist Claudia Sahm is an expert (if not the expert) on the conditions that presage a recession and how policymakers should react as a result. She is the creator of “the Sahm Rule,” an employment indicator monitored by everyone from central banks to the global financial giants. The Sahm Rule says that a recession is likely when the three-month moving average of the national unemployment rate rises by 0.5 percentage points or more, relative to the minimum of the three-month averages from the previous year.

    Sahm’s equation has proved invaluable. As JP Morgan observed, it “was 100% accurate prior to the pandemic, dating back to 1959.”

    Therein lies the problem: During the pandemic, Sahm believes the tectonic plates of the economy began shifting and haven’t settled since.

    The labor market has behaved strangely since the pandemic. President Trump’s anti-immigration drive has reduced the number of available workers. Employers have been reluctant to hire for new roles. Unemployment has ticked up but isn’t out of control by historical standards. Hiring remains tight, in a “low-hire, low-fire” environment.

    Secondly, America’s institutions—the courts, the central bank, its federal agencies—have been politically swayed by the Trump Administration. Economists are no longer sure they act independently to provide the checks and balances that historically made the U.S. economy a transparent, and therefore trustworthy, place to do business.

    The former Fed Section Chief who once served as Obama’s senior economist doesn’t think a blow-out event will crash the American economy. Rather, her fear is that aggregating events will reshape these two fundamental factors, and that the usual responses from policymakers are unlikely to be fit for purpose.

    If a path can be charted, Sahm fears we’re moving the wrong way down it.

    Tectonic plate one: Labor

    Many economists have been eyeing the “knife-edge” in the labor market. They are watching the “breakeven number” (the job creation figure needed to stop unemployment from climbing) grind lower and lower, offset by significant immigration, which has reduced labor supply.

    Sahm isn’t so concerned by the month-to-month shifts. Businesses are finding a steadier footing amid tariffs, according to the Fed’s first Beige Book of the year, meaning employers’ low-fire, low-hire approach is no longer driven by fear. Sahm’s concern is longer term: What it means for people looking for work but who can’t find a job, and whether they’ll be ignored by policymakers who are only alert for the technical numbers that signal a downturn.

    “I get concerned when I hear ‘Well, we don’t have layoffs, so we don’t have a recession,’” Sahm told Fortune in an exclusive interview. “But you do have a very low hiring rate. It might not be an aggregate event, it might not be a broad-based contraction like we see in a recession, but it certainly has real implications for workers coming into the labor market.”

    “Something’s happening here,” Sahm adds. “It’s clearly bad for people looking for work, but we can’t just have this, ‘Oh, if we avoid a recession, all is good.’ It could be that we’re dealing with much more structural shifts, and those aren’t just hard to forecast; they’re hard to assess in the moment because those structural shifts can be very slow.”

    AI replacing roles is, of course, a factor. Fed Chairman Jerome Powell is monitoring the situation “very carefully.” JPMorgan’s CEO Jamie Dimon said LLM-driven layoffs could lead to civil unrest. Yet the hand-wringing over the impact of AI doesn’t explain the depressed hiring rates we’re seeing right now, Sahm said.

    An optimist might suggest that a lower hiring rate is a shake-out from incredibly tight conditions during the pandemic. Between 2022 and early 2024, the Beveridge curve—usually a downward slope illustrating the relationship between job openings and the unemployment rate—was more of a straight line: In theory, for every job opening there was a person in need of a role. Fewer openings at the moment may merely show that employers have found the talent they need, and don’t want to add individuals who—in a tight market—can demand the pay and conditions they want, a phenomenon observed by ADP’s chief economist Dr Nela Richardson.

    The data also isn’t illustrating an economy in need of fiscal stimulus to generate activity—though that’s what it’s getting this year anyway in the form of the One Big, Beautiful Bill Act. Analysts are also banking on interest rate cuts from a more dovish Fed chairman, but again Sahm feels this won’t kickstart sluggish hiring: Sahm described the behavior as how a government might “traditionally” stimulate a weakening economy, “kind of [a] front-end recession response.”

    “But against the backdrop, as best we know from the data, business activity looks pretty OK, consumer activity looks OK. I’m concerned that stimulating more demand isn’t what’s holding back hiring—there’s something else.”

    Sahm’s own creation isn’t demanding action: Currently, the recession indicator is sitting at a mild 0.35. She warned policymakers against relying too heavily on the tool in the current cycle, saying their attention should be focused—”maybe even more so”—on the labor market because “it doesn’t hold the typical pattern, which means our typical tools to fight [it] like a recession may not be the right ones.” 

    Tectonic plate two: Institutions

    For all the ingenuity and commitment it took to build America into the globe’s preeminent economic force, the country would not retain the title if it weren’t for the strength of its institutions. President Trump witnessed the market blip when he threatened the independence of the Federal Reserve with remarks about firing Chairman Powell, and Wall Street has been reinforcing the importance of an autonomous central bank ever since.

    But Trump hasn’t stopped pressuring the Fed, with Chairman Powell now being investigated by a grand jury over expensive renovations to central bank buildings.

    “I think we can look and say up to this point with pretty high confidence, that it’s been economics driving the interest rates,” Sahm said. “What I have a hard time with is [that] the escalation has continued, and the Fed itself is going to go through a transformation this year with a change in leadership. If Powell had two or three more years on his tenure as chair, I would feel more confident than I do with the fact that he has four months left.”

    Like the labor market, Sahm’s concern is that institutions like the Fed—where she spent more than a decade of her career—will be allowed by policymakers to drift.

    “We’re not on a good path, and while I applaud Jay Powell for standing up and having a statement and pushing back, over the long haul that’s not a sufficient check on pressure,” she added. “I don’t know where this goes, and [where] the economy may. We may see inflation come down more rapidly, we may end up in an envionment where lowering interest rates makes sense and we diffuse the issues by that.

    “But I just don’t have a good feeling about this.”

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    Eleanor Pringle

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  • Video: Who Is Trump’s New Fed Chair Pick?

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    President Trump announced Kevin Warsh as his nominee to succeed Jerome H. Powell as chair of the Federal Reserve. Our reporter Colby Smith explains why the choice matters for the economy.

    By Colby Smith, Melanie Bencosme, Sutton Raphael, June Kim and Thomas Vollkommer

    January 30, 2026

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    Colby Smith, Melanie Bencosme, Sutton Raphael, June Kim and Thomas Vollkommer

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  • 3 key questions for investors about Kevin Warsh, Trump’s pick to lead the Fed

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    Investors are greeting President Trump’s nomination of Kevin Warsh to lead the Federal Reserve with cautious approval, while weighing key questions about how the former Fed governor’s crisis-era credentials and appetite for change could reshape U.S. monetary policy.

    Warsh’s hawkish reputation as a former Federal Reserve governor from 2006 to 2011, coupled with his role during the 2008 financial crisis, has helped calm fears of a disruptive overhaul in how the central bank is run.

    Yet investors also foresee potential shifts at the Fed under Warsh’s leadership, following his previous comments about a need for change and a recent openness to lowering interest rates. While U.S. financial markets were little changed on Friday, investors pulled from safe-haven assets such as gold and silver, a sign of relief over Mr. Trump’s choice to replace Fed Chair Jerome Powell with a known figure like Warsh. 

    “That crisis-era experience also suggests to us that Warsh is the person you want running the Federal Reserve if there is a new disruption to the financial system,” said Jaret Seiberg of TD Cowen in a research note.

    Here are three important questions for investors with Warsh on tap to lead the Fed. 

    More rate cuts ahead?

    The biggest question for investors, along with consumers and businesses, is how Warsh’s nomination might alter the Federal Reserve’s interest rate outlook. The central bank held its benchmark rate steady at its most recent meeting on Jan. 28, after officials in December penciled in just one rate cut for 2026.

    At the same time, Mr. Trump has pressured the Fed to lower rates more aggressively, a call he renewed Thursday after the central bank’s latest meeting. “The Fed should substantially lower interest rates, NOW!” Mr. Trump wrote on social media. 

    Warsh has long held hawkish views on inflation, meaning that he has leaned toward keeping interest rates higher as a way to contain inflation. More recently, however, Warsh has softened his stance, telling Fox News host Larry Kudlow that cutting interest rates could tee the economy up for the “next degree of acceleration.”

    “Though traditionally hawkish on inflation, Warsh will argue for more rate cuts by leaning into the argument that productivity gains from AI will allow strong growth without undesirable inflation,” Oxford Economics analysts told investors. “We don’t want to label him as ultra-dovish yet — his views could shift once confirmed.”

    Expectations for rate cuts edged slightly higher after Mr. Trump announced Warsh’s nomination, signaling that investors see room for easing this year, said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

    “There is some sense that he’s going to be pragmatic, but not necessarily ideologically opposed to the monetary setting becoming increasingly accommodative,” Luschini told CBS News. 

    Even so, Warsh won’t have unilateral control over interest rates, as the federal funds rate is set by a majority vote of the 12 members of the Federal Open Market Committee (FOMC).

    What about Fed independence?

    Powell has steadfastly defended the central bank’s independence, emphasizing the importance of insulating monetary policy from political pressure. He reiterated that sentiment on Wednesday in discussing the Fed’s decision to hold short-term interest rates steady. 

    An independent central bank “is a good practice — it’s pretty much everywhere among countries that look at all like the United States, and if you lose that, it would be hard to restore the credibility of the institution,” Powell said.

    Mr. Trump’s eagerness for the Fed to ease borrowing costs raises questions about whether Warsh would bow to the president’s wishes even if economic data signaled a need to stand pat or raise rates, experts note. Because of Warsh’s background, many analysts said they expect him to uphold the Fed’s independence. 

    If Warsh bends under political pressure, he risks eroding his credibility among other members of the FOMC, Luschini told CBS News.

    In April 2025, Warsh addressed the importance of Fed independence during remarks at a meeting hosted by the International Monetary Fund.

    “I strongly believe in the operational independence of monetary policy as a wise economy decision,” Warsh said. “And I believe that Fed independence is chiefly up to the Fed.”

    What does it mean for investors?

    Experts noted that a new Fed chair pick injects some uncertainty into financial markets as investors reassess how monetary policy could shift under new leadership.

    Warsh has called for changes to the Fed’s regulatory and monetary framework, writing in a November Wall Street Journal op-ed that reducing the central bank’s balance sheet would free up liquidity and make it easier for households and small businesses to borrow.

    In order for Warsh to instill confidence in markets, experts said investors will want more details on how he intends to run the Fed.

    “This isn’t about whether Kevin Warsh would hike or cut tomorrow, next month or even this year,” said Mark Malek, CIO at Siebert Financial, in an email. “It’s about the market suddenly having to re-anchor its expectations around a Fed that might look, sound and behave very differently from the one investors have grown used to over the past decade and a half.”

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  • Fed holds interest rates steady  – Houston Agent Magazine

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    The Federal Reserve left interest rates untouched at its Open Market Committee meeting on Wednesday, the first time it hasn’t cut them since July. 

    In a statement after the meeting, the 12-member body said that while economic activity has been expanding at a solid pace, job growth has remained low, and inflation is “somewhat elevated.”  

    Two members appointed by President Trump — Stephen Miran and Christopher Waller — voted against the decision to leave the target range for the federal funds rate at 3.5% to 3.75% because they wanted another cut, while the rest voted in favor of it. 

    The Fed has a dual mandate to achieve maximum employment and keep inflation below 2%. 

    “Uncertainty about the economic outlook remains elevated,” the Fed said. “The Committee is attentive to the risks to both sides of its dual mandate.” 

    The Fed began cutting rates in September after the nation’s economic outlook began to soften. The housing industry has been eager for more cuts to help improve affordability, which has stymied the pace of home sales over the last couple years. Observers expect the Fed to cut rates at least 0.25% this year.

    “While the Federal Reserve is maintaining interest rates in order to try to bring inflation levels closer to its target, uncertainties surrounding the economy remain elevated,” Cotality Chief Economist Selma Hepp said. “The job market remains a sticking point, even though the economy as a whole remains on solid ground. With tariffs continuing to impact pricing on so many consumer products, pressure will remain to find stronger solutions that would help lower the cost of everyday items for families.” 

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    John Yellig

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  • No change to interest rates after first 2026 meeting, Federal Reserve announces

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    The Federal Reserve announced Wednesday that interest rates would remain unchanged, holding steady in its current range of 3.5% to 3.75%. CBS News business analyst Jill Schlesinger has more.

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  • Threat to Fed’s independence boosts economic uncertainty, says Bank of Canada head

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    By David Ljunggren and Promit Mukherjee

    OTTAWA, Jan 28 (Reuters) – The threat to the independence of the U.S. Federal Reserve is boosting economic uncertainty ​around the world, Bank of Canada Governor Tiff Macklem said on ‌Wednesday in his strongest comments to date on the outlook for the Fed.

    U.S. President Donald Trump has ‌repeatedly criticized Fed Chairman Jerome Powell, demanding he cut interest rates. He is seeking to remove Fed governor Lisa Cook while the Department of Justice has threatened Powell with a criminal indictment.

    Macklem made his remarks to reporters after keeping rates on ⁠hold amid what he called ‌unusually high levels of uncertainty.

    “I think the threat to the independence of the central bank in the United States is one ‍thing that has sort of been contributing to this sense of uncertainty,” he said.

    “The Federal Reserve is the biggest, most important central bank in the world, and we all need ​it to work well. A loss of independence of the Fed would affect ‌us all,” he added, saying Canada would be particularly affected given its close economic links to the United States.

    Macklem was one of the central bank heads who earlier this month issued a joint statement backing Powell. Last September, Macklem said Trump’s attempts to pressure the Fed were starting to hit markets.

    Keeping central banks ⁠independent lets them take “difficult decisions” that benefit citizens, ​Macklem said.

    “He is doing a good job at ​leading the Fed based on evidence, based on facts … I hope it stays that way. That’s going to be important for everyone,” ‍he said.

    Bank of Canada ⁠senior deputy governor Carolyn Rogers said a strong Fed benefited virtually every economy in the world because it kept markets and inflation stable.

    “Those things ⁠contribute to predictability and less sort of volatility in rates … there are a lot of reasons ‌for having a strong, independent Fed,” she told the press conference.

    (Reporting ‌by David Ljunggren. Editing by Jane Merriman)

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  • Trump threatens to sue JPMorgan Chase for ‘debanking’ him

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    Jamie Dimon, Chairman and CEO, JPMorganChase, speaks during the Reagan National Defense Forum at the Ronald Reagan Presidential Library in Simi Valley, California, U.S. December 6, 2025.

    Jonathan Alcorn | Reuters

    President Donald Trump on Saturday threatened to sue JPMorgan Chase over allegedly “debanking” him following the Jan. 6, 2021, riot at the U.S. Capitol.

    “I’ll be suing JPMorgan Chase over the next two weeks for incorrectly and inappropriately DEBANKING me after the January 6th Protest, a protest that turned out to be correct for those doing the protesting,” Trump said in a social media post. “The Election was RIGGED!”

    “While we won’t get specific about a client, we don’t close accounts because of political beliefs,” said JPMorgan spokesperson Trish Wexler. “We appreciate that this Administration has moved to address political debanking and we support those efforts.”

    In August, Trump signed an executive order requiring banks to ensure they are not refusing financial services to clients based on religious or political beliefs, a practice known as “debanking.”

    Trump claimed without evidence in an August CNBC interview that he was personally discriminated against by banks. He said JPMorgan Chase and Bank of America refused to take his deposits following his first term in office.

    At the time, JPMorgan said it does not close accounts for political reasons, while Bank of America said it doesn’t comment on client matters. BofA also said it would welcome clearer rules from regulators on how to conduct its activities.

    Trump and his family have a history of railing against financial institutions for allegedly refusing to work with them on the basis of their political orientation.

    Last year, Donald Trump Jr. said his family had difficulty accessing big bank services — a situation that allegedly prompted the Trumps to enter the cryptocurrency industry.

    “So, [my family] got into crypto, not because it was like, ‘hey, this is the next cool thing,’ we got into it out of necessity,” Trump Jr. told CNBC in an interview last June.

    JPMorgan shares are down about 5% over the past week, even after the bank on Tuesday topped expectations for its fourth-quarter earnings and revenue. The shares, and others in the banking sector, fell in response to Trump’s demand to cap credit card rates at 10%, giving financial firms until Jan. 20 to comply.

    Trump’s legal threat against JPMorgan comes as the president, in the same Truth Social post, denied a Journal report on Wednesday that said the president had offered JPMorgan CEO Jamie Dimon the position of Federal Reserve chairman months ago during a meeting at the White House.

    Dimon took the proposition as a joke, according to the Journal report.

    In his post, Trump denied the report, underscoring his reservations about Dimon and JPMorgan.

    “This statement is totally untrue, there was never such an offer,” he wrote. “Why wouldn’t The Wall Street Journal call me to ask whether or not such an offer was made? I would have very quickly told them, “NO,” and that would have been the end of the story.”

    JPMorgan’s Wexler said the “offer” reported by the Journal was a miscommunication. “I should have been more vigilant in correcting that word while attempting to dispute the WSJ’s anonymous sources,” she said.

    The Journal did not immediately respond to a request for comment sent outside of normal business hours.

    Current Fed Chairman Jerome Powell’s term ends on May 15.

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  • Jay Powell, the Prepster Banker Who Is Standing Up to Trump

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    This statement, which the central bank posted on its website, amounted to an unprecedented repudiation of a President by a sitting Fed chair. It caused a political eruption—and not just among Democrats. For once, some elected Republicans spoke up. Remarking that the subpoenas had thrown into doubt the “independence and credibility of the Department of Justice,” Senator Thom Tillis, who sits on the Senate Banking Committee, vowed to block any new nominations to the Fed, including a potential replacement for Powell, whose term as chair ends in May. Senator Lisa Murkowski, the Alaska Republican, publicly backed Tillis’s stance and suggested that Congress should investigate the Justice Department. Even John Thune, the Majority Leader in the upper chamber, voiced disquiet, saying that the allegations against Powell had “better be real.”

    It soon emerged that Trump’s Treasury Secretary, Scott Bessent, also had reservations, if not for the same reasons. After learning of the subpoenas on Friday evening, Bessent reportedly called Trump and told him that they would create difficulties in Congress—an accurate prediction, it turned out—and could also make it more likely that Powell would decide to stay on after May as an ordinary member of the Fed board, an option he can exercise because his term as a regular governor doesn’t expire until January, 2028. If Powell did remain on the board, it would deny Trump the opportunity to appoint another governor more amenable to his wishes.

    Not for nothing did the conservative editorial board of the Wall Street Journal describe the criminal investigation of Powell as “lawfare for dummies.” Trump insisted that he didn’t know anything about the subpoenas. So did Bill Pulte, the Florida housebuilder who now serves as the director of the Federal Housing Finance Agency, and who was a key instigator of the trumped-up mortgage-fraud charges against another Fed governor, Lisa Cook, which Trump used to issue an order firing her. (The Supreme Court is due to hear that case next week.) The denials from Trump and Pulte would perhaps be a bit more believable absent a Washington Post report that the two of them recently dined at Mar-a-Lago and that Pulte brought along with him a mocked-up “Wanted” poster featuring an image of Powell. (In a post on X, Pulte denied that the meeting happened.)

    Pirro seems to have been assigned the role of fall gal. Someone, presumably at the Justice Department, let it be known that Pirro hadn’t informed the higher-ups there before issuing the subpoenas. An unnamed Administration official told Axios that Pirro “went rogue.” This, even though she’s known Trump for decades and surely took her cues from his attacks on Powell. Just last week, Trump criticized a group of U.S. Attorneys at the White House for not moving fast enough in prosecuting his favored targets, the Journal reported. Pirro, for her part, blamed the victim, claiming that the Fed hadn’t replied to her office’s requests for information. “None of this would have happened if they had just responded to our outreach,” she said.

    A likely story. As President, Trump is free to criticize the Fed’s interest-rate policies—counterproductive as such a step usually proves—and even to argue that the Administration should have more say in the central bank’s policy deliberations, as it did before the Treasury-Fed Accord of 1951, which separated debt management (the Treasury’s preserve) from monetary policy (the Fed’s bailiwick). But the Fed is an independent agency that operates under the oversight of Congress and the gaze of the financial markets. To change how it works and impose his will, Trump would need the acquiescence of both, which he surely wouldn’t get, and for good reason. The criminal inquiry into Powell smacked of “how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” a bipartisan group of former Fed chairs and White House economic advisers pointed out in a statement this week. To put it another way, would you trust Trump to set interest rates?

    The authoritarian aspect is glaring. In using cost overruns as a pretext for going after Powell criminally, the Trump Administration demonstrated, yet again, its contempt for the institutions of governance and the legal system. Powell deserves credit for fighting back. On receiving the subpoenas last week, he could theoretically have responded with a bland statement that the Fed would coöperate with any legitimate inquiry, and, meanwhile, get on with its work. With his job up in a few months, that would have amounted to keeping his head down again and relying on the courts to strike down any indictment that might come in the future. Instead, he took the advice that he issued to the Princeton class of 2025 in a baccalaureate address last May: “Throw yourself into the deep end of the pool. . . . Take risks.”

    The seventy-two-year-old Fed chair put to shame the heads of law firms, universities, and public companies who have caved to the White House. He also demonstrated that, at least in the economic arena, there are still some institutional constraints that Trump cannot sweep aside, or not easily. Tragically, these guardrails are being trampled underfoot in other areas, including the streets of some American cities, where Trump’s immigration police are running amok. Compared with that outrage, a U.S. Attorney issuing subpoenas to the Fed may seem like a matter of minor import, but it’s part of the same larger phenomenon: Presidential abuse of power. And, in his own way, Jay Powell is standing up to it. ♦

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    John Cassidy

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  • Trump: Jerome Powell has

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    President Trump blasted Jerome Powell as a “lousy” Federal Reserve chair for failing to more aggressively lower interest rates, while also taking him to task for an ongoing construction project at the central bank. 

    “He’s been a lousy Fed chairman,” Mr. Trump told “CBS Evening News” anchor Tony Dokoupil in an exclusive network interview Tuesday in Dearborn, Michigan. “He was reappointed by Biden. I was a little surprised at that, because I didn’t think he really earned his stripes.”

    Mr. Trump’s latest remarks follow the Department of Justice serving the Fed with grand jury subpoenas last week in connection with a criminal investigation into Powell over the renovation of Federal Reserve office buildings.

    The costs of renovating the Fed’s Washington headquarters and a neighboring building have swelled to $2.5 billion, from a previous estimate of $1.9 billion. Mr. Trump said in the interview that he “could have fixed them up for $25 million” and said Powell is “either corrupt or incompetent.”

    The White House has denied directing federal prosecutors to investigate Powell, and Mr. Trump on Tuesday brushed off a question about whether the Justice Department probe amounts to political retribution.

    “I can’t help what it looks like,” Mr. Trump told Dokoupil.

    Powell on Sunday attributed the Justice Department investigation to Fed officials resisting pressure from Mr. Trump to lower its benchmark interest rate. Mr. Trump, who nominated Powell to lead the Fed in 2017, has repeatedly accused the central bank chief of being too cautious in lowering interest rates.

    Three former Fed chiefs — Janet Yellen, Ben Bernanke and Alan Greenspan — defended Powell this week in a strongly worded statement, accusing the Trump administration of seeking to undermine the Fed’s traditional independence. 

    Mr. Trump also touted his administration’s economic record, telling Dokoupil, “Look, I’ve created the greatest economy, maybe, in history, and you’re seeing that now.”

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  • 10 central banks and global financial institutions back Fed chief Jerome Powell amid DOJ probe

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    London — The heads of 10 major central banks and global financial institutions threw their collective support behind U.S. Federal Reserve Chairman Jerome Powell, saying in a joint statement published Tuesday that it was “critical to preserve” the banks’ independence.

    U.S. prosecutors have opened an inquiry into Powell, prompting his rare rebuke against escalating pressure from President Trump’s administration to lower interest rates.

    “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” said the statement signed by heads of the European Central Bank, the Bank of England and others, including the central banks of Australia, Brazil, Canada and South Korea.

    “The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability. Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest. To us, he is a respected colleague who is held in the highest regard by all who have worked with him,” the statement said.

    From left, Jerome Powell, chairman of the U.S. Federal Reserve; Tiff Macklem, governor of the Bank of Canada; and Andrew Bailey, governor of the Bank of England, speaking during the Kansas City Federal Reserve’s Jackson Hole Economic Policy Symposium in Moran, Wyoming, on Aug. 23, 2024.

    Natalie Behring/Bloomberg/Getty


    The Federal Reserve received grand jury subpoenas from the Justice Department on Friday stemming from an investigation into its chair over the cost of building renovations, Powell said in a video statement shared on Sunday.

    The subpoenas threatened a criminal indictment related to Powell’s testimony before the Senate Banking Committee in June 2025, during which he spoke about a multi-year project to renovate historic Federal Reserve office buildings, according to Powell.

    He said in his video statement that the move by the Department of Justice should, however, be “seen in the broader context of the administration’s threats and ongoing pressure.”

    “This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’ oversight role; the Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts,” said Powell. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”

    Multiple former Fed chairs and Treasury secretaries have also condemned the Trump administration’s probe, as have members of Congress from both parties.

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  • Republicans, Democrats react to DOJ investigating Federal Reserve’s Jerome Powell

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    Republicans, Democrats react to DOJ investigating Federal Reserve’s Jerome Powell – CBS News









































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    Lawmakers on both sides of the aisle are reacting to the news of the Justice Department investigating Federal Reserve Chair Jerome Powell. CBS News’ Natalie Brand reports.

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    Lawmakers warn Fed’s independence at stake amid Powell investigation; Minnesota suing Homeland Security over ICE operations.

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    Details on the Justice Department investigation into Jerome Powell; Trump briefed on military options for Iran as protests continue, sources say.

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  • The Most Notable Reactions to the Jerome Powell Investigation

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    The most notable reaction in Congress came from North Carolina senator Thom Tillis, a Republican who serves on the Senate Banking Committee, who took a shot at the Justice Department’s investigation and said the agency’s credibility is now “in question.” Tillis, who has been more outspoken since he announced plans to retire at the end of his term, vowed to block any of the Trump administration’s nominations to the Federal Reserve.

    Senator Lisa Murkowski said she spoke to Powell Monday morning and that it was clear that the Justice Department’s investigation was “nothing more than an attempt at coercion.” The Alaskan senator echoed her colleague Tillis and said that the Senate should refuse to confirm any Trump nominations to the Federal Reserve.

    In a statement, House Committee on Financial Services chairman French Hill noted that he’s known Powell since they both worked at the Treasury Department during the George H.W. Bush administration. The Arkansas congressman said that he knows Powell as a “man of integrity with a strong commitment to public service.”

    “Pursuing criminal charges relating to his testimony on building renovations at a time when the nation’s economy requires focus and creates an unnecessary distraction. The Federal Reserve is led by strong, capable individuals appointed by President Trump, and this action could undermine this and future Administrations’ ability to make sound monetary policy decisions,” he wrote.

    Senate Majority Leader John Thune said that he hasn’t seen the allegations against Powell, but told reporters Monday that “they better be real and they better be serious.”

    “It needs to be resolved quickly because the Fed’s role and the Fed’s independence in shaping monetary policy in the country is something we need to ensure proceeds without political interference. Hopefully they’ll be able to get this thing, whatever it is — dealt with & resolved quickly,” he said per Punchbowl News.

    Other Republicans expressed some skepticism of the federal government’s investigation even if they held their own criticisms of Powell. New York congressman Mike Lawler, a member of the House Financial Services Committee, did not appear in favor of the move in an interview with Politico. “While I fundamentally believe Chairman Powell was late in addressing inflation under Joe Biden and has been woefully slow in lowering interest rates over the past year, the independence of the Federal Reserve is paramount and I oppose any effort to pressure them into action,” he said.

    Senator Kevin Cramer of North Dakota criticized Powell’s handling of the bank but said in a statement that he doesn’t believe the chairman is a criminal.

    “I hope this criminal investigation can be put to rest quickly along with the remainder of Jerome Powell’s term. We need to restore confidence in the Fed,” Cramer said.

    Senator Dave McCormick of Pennsylvania echoed Cramer’s sentiment in a statement to Politico. “I also agree with President Trump that Chairman Powell has been slow to cut interest rates,” he said. “I think the Federal Reserve renovation may well have wasted taxpayer dollars, but the proper place to fix this is through Congressional oversight. I do not think Chairman Powell is guilty of criminal activity.”

    In an interview with Fox Business’ Maria Bartiromo, Senator Roger Marshall of Kansas suggested the president might be trolling Powell. “We’ll let the system play through here. I think there’s other issues we should be focused on,” he said.

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    Nia Prater

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  • Criminal probe latest in Trump clash with Fed chief Powell

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    When Federal Reserve Board Chair Jerome Powell said Jan. 11 he is being criminally investigated by the federal government, President Donald Trump told NBC News, “I don’t know anything about it.”

    Trump could have been in the dark about the specifics of the Justice Department investigation — approved in November by United States Attorney for the District of Columbia Jeanine Pirro, The New York Times reported — but he has been clear about his desire to oust Powell.

    The investigation focuses on Powell’s oversight of the bank’s headquarters renovation. The Federal Reserve has been undergoing building renovations since 2021 on a project first approved in Trump’s first term. The $2.5 billion cost is about $600 million over the original budget, because of  design changes, higher costs and more asbestos than anticipated.

    The investigation is the most dramatic escalation of long-simmering tensions between Trump and Powell, who the president initially tapped for the top Fed job but who has since drawn Trump’s ire with his go-slow approach on lowering interest rates. 

    Trump said at a Dec. 29 press conference with Israeli President Benjamin Netanyahu that his team was weighing a “a gross incompetence lawsuit” against Powell.

    Trump might have been referring to a claim of “gross negligence,” which can be pursued in either civil or criminal law, depending on its severity.

    That’s different from the criminal investigation launched against Powell. That addresses whether he lied to Congress about the cost and scope of the renovations.

    Powell’s term as chair ends in May, but he can remain as a Fed governor through January 2028.

    “No one — certainly not the chair of the Federal Reserve — is above the law,” Powell said in a video statement. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”

    The White House did not respond to our request for comment.

    The investigation into Powell aligns with other Trump administration efforts to prosecute the president’s adversaries, including former FBI Director James Comey and New York Attorney General Letitia James. Both prosecutions have experienced setbacks with grand juries declining to indict or judicial rulings in the defendants’ favor.

    In a September Truth Social post, Trump directly addressed Attorney General Pam Bondi, urging her to step up the Justice Department’s prosecutorial efforts, including against Sen. Adam Schiff, D-Calif. He wrote, in all caps, “Justice must be served, now!” 

    Trump also moved to fire another Fed governor, Lisa Cook, citing a “criminal referral” from Federal Housing Finance Agency Director William Pulte, a Trump appointee, relating to mortgage fraud. Cook has challenged her firing, and her court case is proceeding.

    Trump’s Dec. 29 remarks are the clearest he made about using the legal system to oust Powell.

    In his second term, Trump has often called for Powell to resign and frequently attacked him:

    • On April 17, 2025: “I’m not happy with him. I let him know it and, oh, if I want him out, he’ll be out of there real fast.” 

    • On June 18, 2025: “We have a stupid person, frankly, at the Fed.” 

    • On July 13, 2025: “Jerome Powell’s been very bad for our country.” 

    • On July 15, 2025: “You talk to the guy, it’s like talking to a nothing. It’s like talking to a chair. No personality, no high intelligence, no nothing.” 

    • On July 22, 2025: “I was very nice to him at the beginning because I know how to sell and, you know, at a certain point it didn’t matter anymore because the guy is just not a smart person.” 

    • On Aug 1, 2025: Powell is “a stubborn MORON.”

    • On Aug. 13, 2025 and Sept. 20, 2025: Powell is “incompetent.” 

    • On Nov. 18, 2025 and Dec. 9, 2025: Powell is “a stupid man” and “not a smart guy.” 

    If the Justice Department is able to convict Powell, it could satisfy the narrow grounds for removing the Fed chair, which can be done “for cause by the President.” This refers to “inefficiency, neglect of duty, or malfeasance in office,” according to a Supreme Court decision about the Federal Trade Commission.

    In a May decision that allowed the president to fire members of independent commissions, the Supreme Court noted that the ruling didn’t affect the Fed, which it called “a uniquely structured, quasi-private entity.”

    Peter Conti-Brown, a University of Pennsylvania professor of financial regulation, told PolitiFact in July that Powell could argue that leveraging the renovation budget is a “pretext” for his firing — a legal term used to describe a false reason an employer gives for firing an employee in order to cover the real reason.

    “Courts evaluating any attempted removal after the fact will assess both the animus and pretext very heavily against President Trump,” Conti-Brown said.

    Powell, in his video response, called the investigatory inquiries “pretexts” that mask the real reason for the administration’s desire to oust him, which is the dispute over setting interest rates.

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  • Federal Reserve Chair Powell Says DOJ Has Subpoenaed Central Bank, Threatens Criminal Indictment – KXL

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    WASHINGTON (AP) — Federal Reserve Chair Jerome Powell said Sunday the Department of Justice has served the central bank with subpoenas and threatened it with a criminal indictment over his testimony this summer about the Fed’s building renovations.

    The move represents an unprecedented escalation in President Donald Trump’s battle with the Fed, an independent agency he has repeatedly attacked for not cutting its key interest rate as sharply as he prefers.

    The renewed fight will likely rattle financial markets Monday and could over time escalate borrowing costs for mortgages and other loans.

    The subpoenas relate to Powell’s testimony before the Senate Banking Committee in June, the Fed chair said, regarding the Fed’s renovation of two office buildings.

    More about:

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    Grant McHill

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  • Fed chair Jerome Powell calls federal investigation

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    Federal Reserve Chair Jerome Powell said in a video Sunday that the Justice Department is investigating whether he lied to Congress about the Central Bank’s renovation project. He compared the threat of criminal indictment to intimidation and said, “This unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.” Scott MacFarlane reports.

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  • Video: Fed Chair Responds to Inquiry on Building Renovations

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    new video loaded: Fed Chair Responds to Inquiry on Building Renovations

    transcript

    transcript

    Fed Chair Responds to Inquiry on Building Renovations

    Federal prosecutors opened an investigation into whether Jerome H. Powell, the Federal Reserve chair, lied to Congress about the scope of renovations of the central bank’s buildings. He called the investigation “unprecedented” in a rare video message.

    “Good evening. This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead, monetary policy will be directed by political pressure or intimidation.” “Well, thank you very much. We’re looking at the construction. Thank you.”

    Federal prosecutors opened an investigation into whether Jerome H. Powell, the Federal Reserve chair, lied to Congress about the scope of renovations of the central bank’s buildings. He called the investigation “unprecedented” in a rare video message.

    By Nailah Morgan

    January 12, 2026

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    Nailah Morgan

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  • Stock futures slide while gold and silver jump after Powell investigation raises fears over the Fed’s independence | Fortune

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    U.S. equity futures fell sharply Sunday night after Federal Reserve Chair Jerome Powell confirmed that he is under investigation related to testimony he gave last June concerning the renovation of Federal Reserve buildings. 

    The New York Times report breaking news of the investigation and Powell’s subsequent disclosure rattled markets, reviving fears that years of President Donald Trump pressuring the Federal Reserve could now be realized into a direct assault on its independence.

    Futures tied to the Nasdaq 100 led the decline, falling about 0.8%, as interest-rate-sensitive technology stocks bore the brunt of the selloff. S&P 500 futures were down roughly 0.5%, while Dow Jones Industrial Average futures fell about 0.4%, according to late-evening pricing.

    Investors sought protection in the traditional safe-haven assets. Gold futures rose 1.7% to around $4,578 an ounce, while silver jumped more than 4%, reflecting renewed demand for protection against political and monetary instability. The U.S. dollar weakened modestly against several major currencies, including the Swiss franc and Japanese yen.

    After years of largely staying silent while Trump repeatedly mocked and threatened him, Powell appeared to have reached a breaking point, issuing a rare and pointed statement. 

    He wrote that while “No one—certainly not the chair of the Federal Reserve—is above the law,” the attack should be seen in the “the broader context of the administration’s threats and ongoing pressure.” 

    “This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings…Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”

    Economists warn that if the executive branch successfully co-opts the Fed, it could create a “self-fulfilling prophecy” of higher long-term inflation.

    As Oxford Economics recently noted, any “cracks in the Fed’s independence” could spread rapidly through markets and ultimately raise borrowing costs for the businesses the administration seeks to protect with low interest rates. 

    In a note published last July, when Trump publicly threatened to fire Powell, Deutsche Bank warned that such a move could spark severe market disruption.

    “Both the currency and the bond market can collapse,” the bank wrote, citing heightened risks of inflation and financial instability. “The empirical and academic evidence on the impact of a loss of central-bank independence is fairly clear.”

    Wall Street executives have echoed those concerns. Brian Moynihan, chief executive of Bank of America, said recently the erosion of Fed independence would carry serious consequences.

    “The market will punish people if we don’t have an independent Fed,” Moynihan said.

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    Eva Roytburg

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  • Trump says he still might fire Powell as Fed chair pick looms | Fortune

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    President Donald Trump teased that he has a preferred candidate to be the next chair of the Federal Reserve, but is in no hurry to make an announcement — while also musing that he might fire the central bank’s current leader, Jerome Powell.

    “I do, still do — hasn’t changed,” Trump said at a press conference Monday, when asked if he has a favorite candidate. “I’ll announce him at the right time. There’s plenty of time.”

    Trump added the Powell should resign and that he’d “love to fire him.”

    “Maybe I still might,” Trump told reporters at his Mar-a-Lago resort in Florida.

    Trump did not specify who is his leading chair candidate and said an announcement would be made in “January sometime.” 

    National Economic Council Director Kevin Hassett has been seen as the frontrunner, though Trump has also expressed interest in former Fed governor Kevin Warsh. Other finalists in the process have included current Fed governors Christopher Waller and Michelle Bowman and BlackRock’s Rick Rieder. 

    Earlier: Bessent Sees Room for a Future Revamp of the Fed’s 2% Target

    Trump has made numerous cryptic — and sometimes contradictory — remarks about his decision-making process regarding the new central bank chief. The president earlier in December said he’d narrowed the pool of contenders down to one, but subsequently said he was considering multiple candidates and has heaped praise on several of the names on the short list.

    Trump has long been a critic of Powell, who he picked to lead the central bank during his first term. The president has indicated he wants the next chair to more aggressively cut interest rates as the White House looks to lower mortgage costs.

    He said Monday he was considering a “gross incompetence” lawsuit against Powell related to an ongoing renovation project at the Fed. Powell’s term as chair is set to end in May of 2026, but his term on the Fed’s Board of Governors doesn’t expire until 2028.

    Join us at the Fortune Workplace Innovation Summit May 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.

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    Josh Wingrove, Kate Sullivan, Bloomberg

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