U.S. prosecutors are investigating Federal Reserve Chair Jerome Powell over his testimony last summer about the central bank’s building renovation project, according to government officials with knowledge of the matter.
The Fed received grand jury subpoenas from the Justice Department on Friday that threaten a criminal indictment relating to Powell’s testimony, the Fed chair said in a video statement on Sunday night.
Powell said the investigation was a pretext as part of President Trump’s ongoing campaign to pressure the Fed to lower interest rates.
“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,” Powell said in the statement… [end quote]
This is an effort to erode the public’s trust in Powell but it will have the reverse effect. It erodes my trust in the administration which is following the authoritarian playbook. It increases my respect for Powell who has already held firm despite vicious personal attacks by Trump.
If Powell’s successor as Fed chair caves to Trump the markets will have a fit.
Wendy
It takes more than a new chairman; a majority of the FOMC have to vote for a change.
IIRC, at the last meeting all but one voting member voted for lowering. I’m not sure there is a large conflict here. Of course, economic conditions will be different in May.
There is not a large conflict there, but his royal highness the king of spoildom has imagined himself as crossed. Revenge is mine sayeth the king of spoildom.
Most likely, but that isn’t what Wendy wrote. She was focused on if the next “Fed chair caves to Trump”. I was pointing out that a) it takes a majority vote to change rates and b) a supermajority voted for reduced rates at the last meeting (including Powell).
Voting for additional rate cuts isn’t the only way to swing from TFG’s you- know-whats. If there are any indications that the Fed Chairman is in the back pocket of the administration, markets will have a fit.
Heck, the news that Powell was subpoenaed by the DOJ was enough to affect markets this morning.
Tillis was out first Sunday night with a statement saying he will seek to put a stop to all of Trump’s central bank nominees over the issue.
“I will oppose the confirmation of any nominee for the Fed — including the upcoming Fed Chair vacancy — until this legal matter is fully resolved,” the retiring GOP senator wrote.
Murkowski followed with her own statement on Monday, saying that she spoke with Powell on Monday morning and called the administration’s investigation “nothing more than an attempt at coercion,” adding that Tillis “is right in blocking any Federal Reserve nominees until this is resolved.”
Tillis’s stance is doubly significant because he sits on the Senate’s Banking Committee, where confirmation hearings for Trump’s Federal Reserve picks will be held and the first votes will take place.
The rest of us including you did not get here pulling our bootstraps up. We got here through an economic framework. Or your personal efforts would result in your death by starvation long ago.
I’m not aware of anyone hyperventilating on this thread, that’s hyperbolic.
Apart from the incoherent musings from TFG, any concrete sign / action he takes that impacts the Fed’s independence will certainly have ripple effects through the markets and economy. Even announcing dumb-dumb ideas moves markets.
Back to the incoherent musings - let’s look at defense stocks after they heard they’ll get another $500 billion. Let’s look at credit card companies after they heard interest rates should be capped at 10%. What do you think will happen to home prices after Pulte purchases $200 billion in mortgage bonds?
Yay, S&P is up! So is gold and silver…by a lot. What do you think that means?
There’s plenty of risky business going down. Whistling past the graveyard is hardly a solid investment strategy.
Clearly the futures market was negative - not massively but notably. Then, various same-party members came out opposing this action and to the point of stating that no new members will be appointed in the interim - I think put a damper on the minor panic.
And, I think the markets are getting used to this sort of buffoonery with the Admin against the Fed. It has been a long time (2018) since the market had a massive selloff due to a POTUS threatening to fire a Fed Chair.
I’d rather listen to Jamie Dimon. He is saying the market is not pricing in risk. He is dead on. The river that is the market will keep flowing, but buying the risks at a premium is stupid money.
