Trump strongly supports the Justice Department's investigation of Powell, potentially jeopardizing Warsh's chances of taking over.
2026-03-20 12:11:16
Amid escalating tensions between the US and Iran and wildly fluctuating global energy prices, US President Donald Trump publicly reiterated his support for the Justice Department's criminal investigation into Federal Reserve Chairman Jerome Powell in the Oval Office on Thursday (March 19), fiercely criticizing Powell as "incompetent and dishonest." This statement directly exacerbated the deadlock in the confirmation process of Powell's successor, Kevin Warsh, and reignited the controversy surrounding the Fed's policy independence.
Before meeting with the Japanese prime minister, Trump told reporters, "He's under investigation because he spent tens of billions of dollars more than expected to build the building." He added, "This suggests criminal activity, perhaps related to the contractors."
Trump has repeatedly claimed that the renovation project of the Federal Reserve headquarters and another building in Washington cost as much as $4 billion, but the actual total was about $2.5 billion. He stated, "I just want the public to know that this person is incompetent, he is a very incompetent person, and probably dishonest."
Trump reiterated his call for interest rate cuts, saying that Powell "should cut rates immediately, but he just won't because he's stubborn and incompetent, which is terrible." This statement came shortly after Powell concluded his press conference following this week's policy meeting, where the Federal Reserve kept interest rates unchanged and raised its inflation forecast, plunging the market into utter despair regarding further easing.
The criminal investigation led by U.S. Attorney for the District of Columbia Jeanine Pirro focuses on allegations of overspending and improper expenditures in the Federal Reserve headquarters renovation project.
Last week, Federal District Judge James Boasberg dismissed a grand jury subpoena for the Federal Reserve Board in a stern ruling, stating that there was “substantial evidence” that the subpoena was intended to pressure Powell to cut interest rates quickly and drastically or resign in order to appease Trump’s demands.
Piro called the ruling "outrageous" and said the Justice Department would appeal immediately.
North Carolina Republican Senator Thom Tillis has repeatedly pledged to block Warsh's nomination from the Senate Banking Committee until the Justice Department completely abandons its investigation into Powell. Tillis stated, "What would the market reaction be if suddenly the public believed that the Fed Chair was appointed and dismissed arbitrarily by the president? I simply cannot imagine."
Warsh must first obtain approval from the Banking Committee before his nomination can be submitted to the full council for a vote. The nomination is currently stalled, and Powell may remain on the board until 2028 after his term as chairman ends in May.
Powell said at a press conference on Wednesday that he would not leave the Federal Reserve Board until the investigation is resolved in a "transparent and definitive manner." He made these remarks in response to a question about Trump's views on the possibility of him remaining in office.
Powell added, "I haven't made a decision yet. I will make the decision based on what is in the best interests of the institution and the people we serve." He emphasized that the Fed's independence is a core principle and will not be shaken by political pressure.
Trump has long publicly pressured the Federal Reserve to cut interest rates, and on Monday he again attacked Powell, saying he "should immediately convene a special meeting to cut rates." However, the investigation led by his Justice Department has become the biggest obstacle to Warsh's succession, highlighting the deep-seated contradictions between the executive branch and the Federal Reserve.
This event has heightened market concerns about the continuity and independence of the Federal Reserve's policies. If Warsh cannot take office quickly, the Fed's decision-making path will become more cautious under the triple pressures of the Iran war, persistent inflation, and economic slowdown.
Investors need to be highly vigilant about the potential disruptions that political factors may cause to monetary policy and global asset prices.
Overall , Trump's strong support for the criminal investigation into Powell and his public accusations of "incompetence and dishonesty" have directly exacerbated the deadlock in the Warsh succession process. The combined effect of the countdown to the Fed Chair's term and the judicial investigation makes a significant shift in monetary policy unlikely in the short term. In the coming months, the progress of the investigation, Warsh's confirmation, and the evolution of the Middle East situation will jointly determine the Fed's leadership change and policy direction.
Investors should closely monitor the Justice Department's appeal outcome, developments on the Senate Banking Committee, and subsequent statements from Trump, as these factors will profoundly impact the dollar's trajectory, US Treasury yields, and the performance of global risk assets. In the short term, the likelihood of the Federal Reserve maintaining a high-interest-rate stance has increased further, and the relative strength of the dollar may continue, while political uncertainty will become a new core variable in the market.
Trump angrily denounces Powell: Construction costs tens of billions of dollars over budget, suspected of being a crime.
Before meeting with the Japanese prime minister, Trump told reporters, "He's under investigation because he spent tens of billions of dollars more than expected to build the building." He added, "This suggests criminal activity, perhaps related to the contractors."
Trump has repeatedly claimed that the renovation project of the Federal Reserve headquarters and another building in Washington cost as much as $4 billion, but the actual total was about $2.5 billion. He stated, "I just want the public to know that this person is incompetent, he is a very incompetent person, and probably dishonest."
Trump reiterated his call for interest rate cuts, saying that Powell "should cut rates immediately, but he just won't because he's stubborn and incompetent, which is terrible." This statement came shortly after Powell concluded his press conference following this week's policy meeting, where the Federal Reserve kept interest rates unchanged and raised its inflation forecast, plunging the market into utter despair regarding further easing.
The judicial investigation became the biggest obstacle to Walsh's appointment, and Tillis vowed to obstruct it at all costs.
The criminal investigation led by U.S. Attorney for the District of Columbia Jeanine Pirro focuses on allegations of overspending and improper expenditures in the Federal Reserve headquarters renovation project.
Last week, Federal District Judge James Boasberg dismissed a grand jury subpoena for the Federal Reserve Board in a stern ruling, stating that there was “substantial evidence” that the subpoena was intended to pressure Powell to cut interest rates quickly and drastically or resign in order to appease Trump’s demands.
Piro called the ruling "outrageous" and said the Justice Department would appeal immediately.
North Carolina Republican Senator Thom Tillis has repeatedly pledged to block Warsh's nomination from the Senate Banking Committee until the Justice Department completely abandons its investigation into Powell. Tillis stated, "What would the market reaction be if suddenly the public believed that the Fed Chair was appointed and dismissed arbitrarily by the president? I simply cannot imagine."
Warsh must first obtain approval from the Banking Committee before his nomination can be submitted to the full council for a vote. The nomination is currently stalled, and Powell may remain on the board until 2028 after his term as chairman ends in May.
Powell: I will not leave until the investigation is over; no decision has been made yet regarding whether to remain in office.
Powell said at a press conference on Wednesday that he would not leave the Federal Reserve Board until the investigation is resolved in a "transparent and definitive manner." He made these remarks in response to a question about Trump's views on the possibility of him remaining in office.
Powell added, "I haven't made a decision yet. I will make the decision based on what is in the best interests of the institution and the people we serve." He emphasized that the Fed's independence is a core principle and will not be shaken by political pressure.
Political turmoil exacerbates uncertainty surrounding the Federal Reserve, raising market concerns about policy continuity.
Trump has long publicly pressured the Federal Reserve to cut interest rates, and on Monday he again attacked Powell, saying he "should immediately convene a special meeting to cut rates." However, the investigation led by his Justice Department has become the biggest obstacle to Warsh's succession, highlighting the deep-seated contradictions between the executive branch and the Federal Reserve.
This event has heightened market concerns about the continuity and independence of the Federal Reserve's policies. If Warsh cannot take office quickly, the Fed's decision-making path will become more cautious under the triple pressures of the Iran war, persistent inflation, and economic slowdown.
Investors need to be highly vigilant about the potential disruptions that political factors may cause to monetary policy and global asset prices.
Overall , Trump's strong support for the criminal investigation into Powell and his public accusations of "incompetence and dishonesty" have directly exacerbated the deadlock in the Warsh succession process. The combined effect of the countdown to the Fed Chair's term and the judicial investigation makes a significant shift in monetary policy unlikely in the short term. In the coming months, the progress of the investigation, Warsh's confirmation, and the evolution of the Middle East situation will jointly determine the Fed's leadership change and policy direction.
Investors should closely monitor the Justice Department's appeal outcome, developments on the Senate Banking Committee, and subsequent statements from Trump, as these factors will profoundly impact the dollar's trajectory, US Treasury yields, and the performance of global risk assets. In the short term, the likelihood of the Federal Reserve maintaining a high-interest-rate stance has increased further, and the relative strength of the dollar may continue, while political uncertainty will become a new core variable in the market.
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