(Washington) The Chairman of the Federal Reserve (Fed), Jerome Powell, announced on Sunday that the American central bank was threatened with prosecution by the Department of Justice over its refusal to give in to Donald Trump’s injunctions concerning the level of interest rates.
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The Fed received a summons from the Justice Department which could lead to an indictment, based on one of its hearings in June, he detailed in a press release.
According to him, this is part of the climate of pressure exerted by American President Donald Trump on the institution, in order to push it to lower its rates more sharply, while inflation still remains above its 2% target.
“This threat is not about my testimony. “It’s a pretext, the threat of prosecution is the consequence of the Fed’s desire to decide its rates in the best interest of the public rather than to respond to the president’s preferences,” denounced Mr. Powell in a video published on the central bank’s website.
Asked about the subject during an interview with NBC, Mr. Trump assured that he “knows nothing about it. I wouldn’t even think of doing it that way. The only pressure he must feel is that the rates are too high. She’s the only one.”
The American president accused the Fed of not having respected the budget planned for the renovation of its headquarters in Washington, estimating that there could be cases of fraud, and putting forward a total cost of 3.1 billion dollars, against 2.7 billion initially planned, a figure Jerome Powell denies.
According to the latter, the real question is “whether the Fed will be able to continue to determine its rates based on economic conditions or whether monetary policy must be driven by political pressure and intimidation.”
Even before his re-election, Donald Trump accused Jerome Powell, whom he calls “too late”, of not acting quickly enough to lower rates and of acting for political and not economic reasons.
A Fed without a president?
Since his return to the White House, the Republican has continued to maintain the pressure, notably calling the president of the Fed a “nimb” and looking for a way to fire him.
“I have served the Fed under four administrations, Republican and Democratic. Each time, I have done my duty without fear or political favor, focused solely on our mandate. I intend to continue the work for which the Senate confirmed me,” Mr. Powell insisted.
The term of the Fed president is due to end next May, which will allow Donald Trump to replace him, potentially with his main economic advisor Kevin Hassett, considered by analysts to be the favorite.
But the seat could remain vacant “while the investigation takes its course”, said Republican Senator Thom Tillis in a press release, assuring that he would not confirm “any nomination for the Fed, including for its president until this legal point (is) not fully resolved”.
“If there was any doubt that some advisors within the government are pushing to end the Fed’s independence, they are now gone. It is now the credibility of the Department of Justice that is at stake,” he added.
If the American president proposes candidates for a position in the administration, including for the central bank, they cannot take office until the Senate has voted in their favor.
In addition to Jerome Powell, Donald Trump tried to dismiss another Fed official, Lisa Cook, a decision temporarily postponed by the Supreme Court.
More broadly, the American government estimated last September that the work of the Fed should be the subject of a complete evaluation. Treasury Secretary Scott Bessent believes it “needs to change course.”
