President Donald Trump’s long-running spat with Federal Reserve Chairman Jerome Powell has returned to the spotlight after central bank leaders made it clear they will not change policy just because of political pressure.
The Federal Reserve kept interest rates steady in a target range of 3.5%-3.75% on Wednesday, even as President Donald Trump put intense pressure on the central bank and Chairman Jerome Powell to cut borrowing costs.
By refusing to cut rates, central bank leaders asserted their independence from the White House, a principle long supported and collectively defended by central bank chiefs around the world.
The standoff is not just a war of words. It has escalated to the point where Powell and the Fed are facing a criminal investigation launched by close Trump ally Jeanine Pirro, the U.S. attorney for the District of Columbia, NBC News reported.
Why does Trump want him gone?
Jerome Powell’s criminal investigation is related to his testimony before Congress last June about the cost of renovating the Federal Reserve building — an investigation that Powell publicly denounced as politically motivated pressure on the Fed’s refusal to cut interest rates.
US President Donald Trump has taken jabs at Powell several times in the past, but in his latest remarks he sharply criticized Powell for refusing to cut interest rates, accusing him of damaging the country’s economy and even undermining national security.
These pointed remarks are nothing new, as the US president has previously argued that the central bank’s cautious stance is hurting businesses, markets and his broader economic agenda.
The president has linked his push for lower tariffs to his administration’s tariff policies, arguing that they have strengthened the U.S. economy and increased government revenue.
Meanwhile, Powell defended the Fed’s independence, insisting that monetary policy must be guided by inflation risks and economic data, not political pressure from the White House.
When does Powell’s term end?
Powell’s term as chairman of the Federal Reserve ends in May, but he is not required to leave the Washington-based Board of Governors until 2028, Reuters reported.
The search for a new Fed chair is nearing its end, and President Trump is expected to announce a successor soon. Whoever Trump chooses, the nominee’s name would then go to the Senate for confirmation.
Leading candidates for the high-stakes position include Kevin Hassett (White House National Economic Director), Kevin Warsh (former Fed official), Christopher Waller (Fed Governor) and Rick Rieder (BlackRock CEO).
