Trump calls Powell "incompetent or a liar"! Is a storm brewing to destroy the dollar's credibility?
2026-01-14 09:12:11
U.S. President Donald Trump on Tuesday (January 13) again launched a scathing attack on Federal Reserve Chairman Jerome Powell, accusing him of being either "incompetent" or "dishonest." These remarks come as the Justice Department's criminal investigation of the Fed chairman faces growing opposition.
Trump made these latest aggressive remarks when asked whether this unprecedented move would undermine confidence in the Federal Reserve, which has long enjoyed independence from the executive branch.
Trump said, "His budget went over budget by billions of dollars." This was clearly referring to the billions of dollars in costs associated with the Federal Reserve's Washington headquarters renovation project, which is central to the Justice Department's investigation.
Trump told reporters outside the White House, "So, he's either incompetent or dishonest, I don't know which one he is. But he did—certainly not very well."
After visiting a Ford plant in Michigan and speaking at the Detroit Economic Club, Trump launched further insults against Powell.
In his speech, Trump said of Powell, "That bastard will be out of office soon."
Trump made these remarks as bipartisan criticism of the investigation and support for the Federal Reserve's independence continued to grow.
"Everyone we know believes in the Fed's independence," JPMorgan Chase CEO Jamie Dimon told reporters earlier Tuesday after the bank released its fourth-quarter earnings. "Anything that undermines that independence is probably not a good idea, and in my view, it would have the opposite effect, pushing up inflation expectations and potentially raising interest rates over time."
Trump dismissed Dimon's concerns late Tuesday, telling reporters, "I think I'm doing a great job," and calling Powell "a terrible Fed official."
Trump said, "He did a terrible job. We should have lower interest rates. Jamie Dimon probably wants higher interest rates. Maybe that way he can make more money."
JPMorgan Chase CEO Jamie Dimon's warning about maintaining the Federal Reserve's independence resonated with many Republican lawmakers—including staunch Trump supporters. Louisiana Republican Senator John Kennedy, a member of the Senate Banking Committee, stated on Monday, "The best way to design a mechanism that ensures interest rates only rise and never fall is to have the Fed and the administration engage in a vicious confrontation. We simply don't need that."
According to reports, Treasury Secretary Scott Bessant has expressed concerns to Trump that the Justice Department's investigation could complicate the existing arrangements for appointing a new Federal Reserve chairman after Powell's term ends in May.
However, U.S. Attorney Jeanne Piro signaled overnight that her Washington office had no intention of halting its legal action against the Federal Reserve and Powell. She posted on social media platform X: "Our office has repeatedly contacted the Federal Reserve to discuss cost overruns and the Chairman's congressional testimony, but has received no response, which is why we have had to initiate legal proceedings—this is not a threat."
Piro wrote: "The word 'prosecution' came from Powell himself. This could have been avoided if they had responded to our inquiries. This office makes decisions solely based on the facts. We agree with the Federal Reserve Chairman's view that no one is above the law, and that is why we expect his full cooperation."
Federal Reserve Chairman Jerome Powell said Sunday night that the Justice Department had issued a grand jury subpoena and threatened criminal charges based on his testimony to the Senate regarding the renovation of the Fed's office buildings. Powell directly linked the investigation to Trump's frequent complaints that the Fed was cutting interest rates too slowly.
In a video statement, Powell said, "The threat of criminal charges is a natural consequence of the Federal Reserve's decision to set interest rate policy based on the best judgment of serving the public, rather than following the president's preferences. No one—especially the Federal Reserve Chairman—is above the law. But this unprecedented action should be viewed in the broader context of ongoing threats and pressure from the government."
Trump insisted that the subpoena issue was unrelated to his views on interest rates, saying Sunday night, "No, I would never consider putting pressure on anyone in that way. What should really put pressure on him is the fact that interest rates are too high, that's the only pressure he's facing."
If the Federal Reserve's independence continues to be undermined, the dollar's credit premium will gradually erode, and the risk of structural devaluation will increase.
The current situation is essentially a "political risk premium" being injected into the dollar's pricing. If the turmoil evolves into a constitutional crisis, the dollar's safe-haven appeal may temporarily give way to concerns about the stability of the US system. During Wednesday's Asian trading session, the dollar index fluctuated narrowly around 99.20.
(US Dollar Index Daily Chart, Source: FX678)
At 9:11 AM Beijing time, the US dollar index is currently at 99.23.
Trump made these latest aggressive remarks when asked whether this unprecedented move would undermine confidence in the Federal Reserve, which has long enjoyed independence from the executive branch.
Trump attacks Powell, Justice Department investigation sparks controversy
Trump said, "His budget went over budget by billions of dollars." This was clearly referring to the billions of dollars in costs associated with the Federal Reserve's Washington headquarters renovation project, which is central to the Justice Department's investigation.
Trump told reporters outside the White House, "So, he's either incompetent or dishonest, I don't know which one he is. But he did—certainly not very well."
After visiting a Ford plant in Michigan and speaking at the Detroit Economic Club, Trump launched further insults against Powell.
In his speech, Trump said of Powell, "That bastard will be out of office soon."
Trump made these remarks as bipartisan criticism of the investigation and support for the Federal Reserve's independence continued to grow.
"Everyone we know believes in the Fed's independence," JPMorgan Chase CEO Jamie Dimon told reporters earlier Tuesday after the bank released its fourth-quarter earnings. "Anything that undermines that independence is probably not a good idea, and in my view, it would have the opposite effect, pushing up inflation expectations and potentially raising interest rates over time."
Trump dismissed Dimon's concerns late Tuesday, telling reporters, "I think I'm doing a great job," and calling Powell "a terrible Fed official."
Trump said, "He did a terrible job. We should have lower interest rates. Jamie Dimon probably wants higher interest rates. Maybe that way he can make more money."
Dimon's warning sparks bipartisan concerns, further challenging the Fed's independence.
JPMorgan Chase CEO Jamie Dimon's warning about maintaining the Federal Reserve's independence resonated with many Republican lawmakers—including staunch Trump supporters. Louisiana Republican Senator John Kennedy, a member of the Senate Banking Committee, stated on Monday, "The best way to design a mechanism that ensures interest rates only rise and never fall is to have the Fed and the administration engage in a vicious confrontation. We simply don't need that."
According to reports, Treasury Secretary Scott Bessant has expressed concerns to Trump that the Justice Department's investigation could complicate the existing arrangements for appointing a new Federal Reserve chairman after Powell's term ends in May.
However, U.S. Attorney Jeanne Piro signaled overnight that her Washington office had no intention of halting its legal action against the Federal Reserve and Powell. She posted on social media platform X: "Our office has repeatedly contacted the Federal Reserve to discuss cost overruns and the Chairman's congressional testimony, but has received no response, which is why we have had to initiate legal proceedings—this is not a threat."
Piro wrote: "The word 'prosecution' came from Powell himself. This could have been avoided if they had responded to our inquiries. This office makes decisions solely based on the facts. We agree with the Federal Reserve Chairman's view that no one is above the law, and that is why we expect his full cooperation."
Powell: Justice Department investigation related to Trump's pressure on interest rates
Federal Reserve Chairman Jerome Powell said Sunday night that the Justice Department had issued a grand jury subpoena and threatened criminal charges based on his testimony to the Senate regarding the renovation of the Fed's office buildings. Powell directly linked the investigation to Trump's frequent complaints that the Fed was cutting interest rates too slowly.
In a video statement, Powell said, "The threat of criminal charges is a natural consequence of the Federal Reserve's decision to set interest rate policy based on the best judgment of serving the public, rather than following the president's preferences. No one—especially the Federal Reserve Chairman—is above the law. But this unprecedented action should be viewed in the broader context of ongoing threats and pressure from the government."
Trump insisted that the subpoena issue was unrelated to his views on interest rates, saying Sunday night, "No, I would never consider putting pressure on anyone in that way. What should really put pressure on him is the fact that interest rates are too high, that's the only pressure he's facing."
Analysis of the impact on the US dollar
If the Federal Reserve's independence continues to be undermined, the dollar's credit premium will gradually erode, and the risk of structural devaluation will increase.
The current situation is essentially a "political risk premium" being injected into the dollar's pricing. If the turmoil evolves into a constitutional crisis, the dollar's safe-haven appeal may temporarily give way to concerns about the stability of the US system. During Wednesday's Asian trading session, the dollar index fluctuated narrowly around 99.20.
(US Dollar Index Daily Chart, Source: FX678)
At 9:11 AM Beijing time, the US dollar index is currently at 99.23.
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