The independence of the US Federal Reserve is sacrosanct. Removing it from the vicissitudes of elected officials, many of whom do not have a clue about economics and finance, has been foundational to the stability of the US economy. The revelation that the US Department of Justice has indicted the current Fed Chair Jerome Powell has rocked both sides of the aisle, Republicans and Democrats, as undermining the stability of the country and harming the ability of the Fed to set monetary policy.
Washington, DC’s US Attorney Jeanine Pirro, a former Fox News pundit and close ally of President Trump, is leading the investigation, with reports stating it began in November.
X account Geiger Capital, a pro-business channel typically pro-Trump, hammered the Administration as “going full-blown banana republic” after the indictment hit the news yesterday.
Geiger Capital stated:
“This is absurd… Trump’s DOJ is now threatening Jerome Powell with criminal indictment…”
And;
“Powell was set to be remembered in the history books for the “transitory” debacle and dismissing the largest inflation wave in half a century… Trump will single-handedly turn him into a financial hero second only to Paul Volcker.”
Republican Senator Thom Tillis, who sits on the Senate Banking Committee, declared there will be no vote on any nomination to replace the Fed Chair, with expectations that Trump will soon announce his pick to take over the role after Powell’s term expires.
“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question. I will oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved,” stated Tillis.
As Powell’s term as Chair ends in just a few months in May (his term on the Board expires in 2028), the timing seems odd and perhaps reflects Pirro’s goal of pleasing her boss. It would be surprising if anything was accomplished by the time Powell exits the Fed.
While there was plenty of criticism to be heard from the Democrats, which is expected, the immediate condemnation from prominent Republicans indicates there is concern within the GOP about Trump’s attempt to influence the Feds’ activities.
Chair Powell and President Trump have long had a contentious relationship, as Trump believes interest rates must be lower, while Powell sees his role as interpreting the data and making the best decision possible based on empirical information.
With midterms looming, it appears that Trump is concerned about the state of the economy, even though recent data indicate a surprisingly robust environment with GDP rising, inflation lowering, and unemployment not out of control.
The US Department of Justice aims to prosecute Powell based on an ongoing renovation project and cost overruns. Exceeding budgets set by the Feds is common in the federal government. In fact, the US Department of War has never passed an audited budget, even though it has been mandated since 2018.
In an unprecedented action, Chair Powell issued a video response to the indictment, stating the attack on the institution was about whether interest rates [are set] based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation.”
Video message from Federal Reserve Chair Jerome H. Powell: https://t.co/5dfrkByGyX pic.twitter.com/O4ecNaYaGH
— Federal Reserve (@federalreserve) January 12, 2026