President Donald Trump has escalated his criticism of Federal Reserve Chair Jerome Powell, branding him as either “incompetent” or “crooked.” This latest outburst occurred on Tuesday morning as Trump addressed reporters at the White House before departing for a trip to Michigan. His remarks come amid increasing support for Powell from some Republican colleagues who seek to reduce tensions surrounding the Federal Reserve.
Trump stated, “Well, he’s billions of dollars over budget. So, he’s either incompetent or he’s crooked. I don’t know what he is, but he certainly doesn’t do a very good job.” This criticism follows Powell’s recent announcement that he is facing a criminal investigation related to his congressional testimony regarding the cost overruns on renovations to the Fed’s headquarters.
In a video statement released on Sunday, Powell confirmed that the investigation stems from his refusal to bow to Trump’s demands regarding interest rates. He emphasized, “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
Despite Trump’s assertions, both Powell and the Federal Reserve have denied any wrongdoing concerning the $2.5 billion renovation project. The Fed’s website attributes the cost overruns to various factors, including design changes, unexpected asbestos removal, and rising material costs.
Trump’s remarks were compounded by comments from Jeanine Pirro, the U.S. Attorney for the District of Columbia, who stated that the Justice Department had no choice but to issue subpoenas to the Fed after previous inquiries about the project’s costs went unanswered. “The United States Attorney’s Office contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony, but were ignored, necessitating the use of legal process—which is not a threat,” Pirro explained in a statement on social media.
The tensions surrounding Powell’s leadership have implications for the broader political landscape. Trump nominated Powell in 2017 when he was already a member of the Fed’s Board of Governors, but relations have soured since then. The possibility of Powell’s replacement has been a topic of interest, especially with his term as chair expiring in May 2024.
Republican support is critical for any nominee Trump might propose, especially in a Senate that is closely divided. Following Powell’s announcement of the investigation, Senator Thom Tillis of North Carolina expressed his intent to withhold support for any Trump nominee until the matter is resolved. Tillis, a member of the Senate Banking Committee, noted that such a stance could lead to a deadlock within the committee.
Beyond Tillis, several other Republicans have voiced concerns regarding the criminal investigation into Powell. Notably, all three living former Fed chairs, including Alan Greenspan, have publicly backed Powell, as have current leaders of central banks from around the world.
As the situation unfolds, the implications for both the Federal Reserve’s leadership and the broader economic policy remain significant. The investigation into Powell and the ongoing tension with Trump highlight the delicate balance of independence that central banks strive to maintain in the face of political pressures.
