Federal Reserve Chair Jerome Powell Faces Trump Investigation as He Defends Central Bank

Federal Reserve Chair Jerome Powell is publicly defending the independence of the central bank after the Trump administration initiated a criminal investigation involving him. Powell made a rare direct statement saying he will not be intimidated. The ongoing dispute is unfolding in Washington and has major implications for U.S. economic policy.

Powell’s stance matters because the Federal Reserve’s independence is a key pillar of global financial stability. The chair’s actions and words can influence markets, inflation expectations, and economic confidence. Trusted outlets including Reuters and BBC have reported on the situation.

Federal Reserve Chair Jerome Powell and the Investigation

Jerome Powell, who leads the U.S. Federal Reserve as chair, addressed the public after news emerged that a criminal investigation was opened by the Department of Justice at the behest of the White House. This investigation reportedly centers on Federal Reserve headquarters renovations and has been widely discussed in the press.

In his video statement, Powell emphasized that he has served under four presidential administrations, both Republican and Democratic, without political bias. He said his focus remains on the Fed’s dual mandate of price stability and maximum employment, not political preference. Powell stated outright that threats would not deter him from fulfilling his duties.

The Trump administration has repeatedly pressured the Fed to lower interest rates, something Powell has resisted. Trump has publicly criticized Powell before, calling him derogatory names and suggesting he should be removed. Despite this, Powell has maintained that monetary policy decisions are based on economic data and not political influence.

Economists have said that a politicized Federal Reserve could undermine inflation control and increase economic volatility. The Fed was created in 1913 as an independent institution to insulate monetary policy from short-term political pressures. Powell’s defenders argue that this independence is essential to maintain market confidence and long-term economic health.

During his tenure, Powell guided the U.S. economy through major upheavals including the COVID-19 pandemic, high inflation periods, and shifting fiscal policies. Many analysts credited the Fed under Powell with achieving a “soft landing” where inflation moderated while labor markets remained relatively strong.

Broader Impact and Responses

Political tensions around the Federal Reserve have escalated in recent months, with the White House publicly airing grievances about interest rate decisions. Trump’s allies have amplified criticism of Powell in speeches and on social platforms. The criminal investigation adds a new layer of complexity and concern.

Market participants are closely watching how the dispute could affect policy credibility. If the Fed appears subject to political leverage, investors may demand higher risk premiums for U.S. assets. Central banks globally monitor U.S. policy for signals on inflation and currency trends, meaning the situation could resonate beyond U.S. borders.

Powell’s term as chair is set to expire in May, and Trump has reportedly selected a successor. However, the timing and details of any change remain uncertain. For now, Powell’s public declaration reinforces his commitment to institutional norms and economic stewardship.

Federal Reserve Chair Jerome Powell continues to defend central bank independence amid intense political pressure and legal scrutiny. His stance underscores the critical role of the Fed in stewarding economic stability and resisting political interference.

References

Reuters | Powell says he will not bow to pressure from Trump over rate policy and investigation | January 13, 2026

BBC News | US Fed chair Jerome Powell defends independence after Trump criticism | January 13, 2026

Associated Press | Jerome Powell makes rare direct address amid Trump administration investigation | January 13, 2026