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Behind the stoush: Jerome Powell claims ‘intimidation’ as Trump says he’s ‘not very good’
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Behind the stoush: Jerome Powell claims ‘intimidation’ as Trump says he’s ‘not very good’

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US President Donald Trump has denied any involvement in the Justice Department’s criminal investigation into US Federal Reserve chief Jerome Powell, as tensions between the president and the US central bank escalate.
The dispute intensified this weekend after Powell said the Justice Department had opened a criminal investigation into whether he misled Congress about a costly renovation project at the Fed’s headquarters in Washington.
In a video statement, Powell for the first time publicly accused the Trump administration of political pressure and intimidation, marking a clear escalation in tensions.
But Trump said he knew nothing about the investigation.

“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” Trump said of Powell in an interview with NBC News on Sunday evening.

What’s behind the Powell investigation?

The Justice Department says the investigation focuses on an alleged “misuse of taxpayer dollars” related to the renovation of two historic buildings at the Federal Reserve headquarters.
The project exceeded its original budget from US$1.9 billion ($2.8 billion) to about US$2.5 billion ($3.7 billion), with the Fed citing higher-than-expected labor and material costs, design changes and asbestos and lead contamination.

Trump has accused Powell of mismanagement and possible fraud, though he has provided no evidence.

Powell warns against political ‘intimidation’

Powell suggested that concerns about the renovation were being used as a pretext to undermine the central bank’s independence — the first time he has publicly accused the Trump administration of political intimidation.
“The threat of criminal prosecution is a result of the Federal Reserve setting interest rates based on our best estimate of what will benefit the public, rather than following the president’s preferences,” Powell said.

“This is about whether the Fed will be able to continue setting interest rates based on evidence and economic conditions – or whether monetary policy will instead be driven by political pressure or intimidation.”

Three former Federal Reserve chairmen – Janet Yellen, Ben Bernanke and Alan Greenspan – have condemned the Justice Department’s move, warning that it risks undermining the central bank’s credibility.

“This is how monetary policy is made in emerging markets with weak institutions, with very negative consequences for inflation and the functioning of their broader economies,” they wrote in a joint statement.

Is it actually about renovations?

If Trump and Powell’s history is anything to go by, the latest conflict could be related to Trump’s long-standing frustration with the Federal Reserve’s refusal to cut rates.
The independent central bank is tasked with keeping inflation under control, unemployment low and the financial system stable.
Too high interest rates can slow economic growth by discouraging borrowing, while too low interest rates can fuel inflation – a balancing act that central banks must manage without political interference.
However, Trump has repeatedly pushed the Fed to lower interest rates, sometimes calling for cuts of as little as 1 percent — levels normally reserved for economic crises.

He has also frequently attacked Powell personally, despite appointing him to the role in 2017.

Last April, Trump said Powell’s firing “can’t come soon enough.” Just two weeks ago, amid renewed scrutiny of the renovation project, Trump said he would “love to fire” Powell, calling him an “absolute fool.”
Powell’s term as chairman ends in May, but he could choose to remain on the board until 2028, delaying Trump’s chance to nominate a replacement.
Although former presidents have pressured the Federal Reserve to cut interest rates, none have ever publicly threatened to fire officials or bring criminal charges against them. This has raised concerns that this latest dispute marks a significant escalation in the battle for the bank’s independence.
— With additional reporting by Reuters.

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