The US political arena has recently witnessed fierce competition surrounding a leadership change at the Federal Reserve. The Trump administration is pushing forward with Kevin Warsh's nomination for chairman while the criminal investigation into current chairman Jerome Powell continues. These two parallel processes could potentially lead to direct conflict, drawing significant market attention.

The Senate Banking Committee is scheduled to hold a hearing on April 16.

The U.S. Senate Banking Committee will hold a nomination hearing on April 16 to consider Kevin Warsh's nomination as the next Federal Reserve Chairman. A person familiar with the matter revealed this arrangement to CNBC.

Despite the ongoing independent criminal investigation into the Federal Reserve, Warsh's nomination process has not been halted, sowing the seeds of potential conflict between the two processes initiated by the Trump administration.

Republican senators set up confirmation barriers

Senate Banking Committee member and Republican Senator Thom Tillis of North Carolina has made it clear that he will not vote to confirm Kevin Warsh until the relevant investigation is fully resolved. However, President Trump is eager for Warsh to be confirmed by the Senate as soon as possible.

Senator Tillis's opposition suggests that Trump may find it difficult to achieve both goals simultaneously, but the move to proceed with the hearings indicates that he is still trying to overcome this obstacle. Currently, the Senate Banking Committee has not included this hearing in its public schedule.

Walsh himself and a spokesperson for the committee declined to comment.

Criminal investigation into allegations against Powell's renovation work

This criminal investigation primarily focuses on whether current Federal Reserve Chairman Jerome Powell made false statements to Congress regarding the expensive renovation of the Fed's office buildings. Powell strongly condemned the investigation, believing it to be a political pretext to force him to lower interest rates. This comes after Trump publicly demanded that the Fed cut rates.

Congress has explicitly entrusted the Federal Reserve with the responsibility of remaining independent and free from political interference in setting interest rate policy. Historical experience shows that independent central banks typically perform better in combating inflation.

As the Iraq War drives up energy costs, the risk of renewed inflation in the United States is increasingly becoming a focus of market attention.

Court ruling in favor of Powell leaves investigation outlook uncertain.

U.S. District Judge James Boasberg for the District of Columbia rejected the government's motion to reconsider the dismissal of the subpoenas last Friday. This means that the subpoena proceedings against the Federal Reserve cannot proceed, and the current status of the investigation remains unclear.

A spokesperson for Jeanine Pirro, the U.S. Attorney for the District of Columbia, said on Saturday, "We will absolutely appeal the judicial interference with our access to the grand jury."

Senator Tillis's office did not immediately respond to requests for comment over the weekend. While he had previously praised Warsh's professional qualifications, he emphasized that he would only lift the obstruction once his concerns about the Fed's independence were alleviated.

Democratic senators issued strong criticism

Massachusetts Democratic Senator Elizabeth Warren wrote to Warsh in March criticizing him, predicting that if he were to take office, he would become a "rubber stamp on President Trump's Wall Street priority agenda," and accusing him of "not learning any lessons from his failures" during his previous tenure as a central bank official.

Walsh had previously declined to comment on the letter. It is customary for federal nominees to make public statements before their hearings.

Personnel changes at the Ministry of Justice may affect the direction of the investigation.

At the same time, significant personnel changes are taking place within the Department of Justice, which could provide an opportunity for prosecutors to change their stance on the Powell case.

Trump dismissed Attorney General Pam Bondi last Thursday and appointed Todd Blanche as acting attorney general. Blanche previously served as Trump's defense attorney before joining the administration.

The government stated that the decision to investigate Powell is ultimately up to the Department of Justice, but Trump himself has repeatedly expressed public support for the investigation. On March 19th, he explicitly stated that there was "criminal activity" involved in the Federal Reserve building spending.

However, Judge Bosberg stated clearly in his ruling: "The government's most fundamental problem is that it has not provided any evidence of fraud."

The Federal Reserve's independence is facing a severe test.

This power struggle surrounding the nomination of the Federal Reserve Chair and the criminal investigation not only tests the relationship between the Trump administration and Congress but also highlights the importance of maintaining the central bank's independence. Against the backdrop of rising energy prices and potential resurgence of inflationary pressures, the Fed's future policy direction will directly impact the economic trajectory of the United States and the world.

Whether the hearings for Warsh's nomination will proceed as scheduled, and the final outcome of the criminal investigation, will be the focus of close market attention. This intertwined political and economic contest will ultimately profoundly impact the future direction of the Federal Reserve and the independence of US monetary policy.