United States Federal Reserve Chairman Jerome Powell says the Fed's setting of interest rates based on evidence and economic conditions is under threat from political pressure and intimidation.
The US Department of Justice has served the Fed with grand jury subpoenas threatening a criminal indictment related to Powell's testimony before the US Senate Banking Committee last June, the Fed says.
In a statement and video Powell notes that testimony included discussion of a multi-year project to renovate Federal Reserve office buildings. Powell says, however, the "unprecedented action" should be seen in the broader context of the Trump administration's threats and ongoing pressure.
"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation."
Powell's full statement is below.
Good evening.
On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings.
I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law. But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure.
This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. 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.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.
Thank you.
And here's the video.
33 Comments
Like the fall of the Soviet Union and the communist bloc, are we looking at the fall of Western Keynesianism? If we were, the bankers and Ponzinomics promoters would be immediately fearful. But I think they would be overreacting.
PM proxies on the ASX howling:
ETPMAG (silver): +8.3%
PMGOLD (gold): +2.4%
"...are we looking at the fall of Western Keynesianism?"
You think what we have experienced post GFC is Keynesianism?....it is the opposite.
Keynesianism is primarily an economic theory, but it can and often does function as part of a broader political ideology when adopted as a policy “package” or worldview.
Would you like to elaborate on how it's changed?
It hasnt changed ...it is apparent you have no understanding of Keynes' theorem of economics.
He was concerned with trade imbalance, currency valuation and private debt, consequently he advocated the use of fiscal policy (read taxation)...the antithesis of how the GFC was addressed.
(p.s. and Bancor...but the US overruled him, and so we are where we are.
Keynesian economics as a theoretical framework does not require central bank independence, and historically early Keynesian policy was compatible with strong Treasury control of monetary policy. However, modern “New Keynesian” macro and inflation‑targeting regimes have often been implemented through independent central banks, so in practice many Keynesian‑influenced policy frameworks have coexisted with, and sometimes endorsed, independence.
Many inflation‑targeting regimes, typically justified within New Keynesian frameworks, assume an independent central bank to enhance credibility and anchor inflation expectations, but this is a policy recommendation layered on top of the theory.
Adding 'neo' is a weak justification for misrepresentation of a theorem.
Neo-Keynesian is a thing. For central banking, Neo‑Keynesian (old neoclassical synthesis) thinking underpins IS–LM/Phillips‑curve style stabilization, while New Keynesian economics underpins modern interest‑rate‑rule, inflation‑targeting frameworks and the “new neoclassical synthesis.”
So 'New Keynesian' is more correct in my example.
This (and all his other acts of belligerence) will only expedite the rush to real money.
Very, very well said Mr Powell. If only DJ Trump had a tenth of your intelligence or integrity.
The most intelligent thing to do would be to retire and spend time with the grand kids - not staying on because you want to play a game of 'who has got the biggest ego with Donald Trump' - because you will lose that game. But it appears to be a game that he is intending on playing. Which in my opnion, at 72 and financially well off, is a foolish thing to do (not an intelligent thing).
Walk away and let somebody else deal with Trump and spend your very limited remaining years (remember he is an old man at 72!) on earth in peace - not playing ego games.
What? Maybe he doesn't like being bullied by an idiot? Maybe the US and the world need more people to say, "Look, mum, I can see the emperor's willy". Maybe Powell doesn't want to slink away into retirement while some mafia boss p*%ses all over his career? Maybe it's not ego but, can it even be said in this day and age, some semblance of (gasp) integrity?? or if not integrity, at least, spine?
Exactly. Sounds like IO didn’t do what he should have done to his high school bully. Punch them in the snout.
Yes I bet you were the big man at high school Albert, punching all the Donald Trumps of this world in the snout (yeah right!)
There's probably a higher probability given this type of comment that you were the bully who needed punching.
Antz....
Powell is 72, the head of the Fed, has a net worth of $50 million, and has been setting monetary policy in a manner that has greatly enhanced his own wealth.
He doesn't need to worry at all about a mafia boss pissing on his career. Because he is the mafia boss.
IO, have you considered that Powell actually cares about the average American, and that this is be the reason why he is willing to stand up to Trump. It's called integrity, Powell has it, Trump doesn't.
Ahh and then there is integrity and holding of principled values - Powell seems to embody those virtues.
You are advocating for validation of school yard bullying as the optimal way of ordering society and economic policy.
Well well, seems the president is being open about Venezuela for the oil, and Powell open and honest about the influence of the president. How long since we have seen this level of honesty in US politics?
When will all these old dudes in their 70's with too much money get past their egos and retire?
Powell is 72 and loaded....what is he trying to achieve by staying on as the leader of the Fed?
I can understand people still being involved in politics when > 70...(just...) but being the guy that sets interest rates in your 70s!!! WTF...retire and play some golf man and spend time with the grand kids.
Its not like Powell is irreplaceable and that if he leaves the world is going to end (I mean we've already witnessed the financial instability that happens when hes in the job...so what could be worse than the inflation misread of recent times? Is somebody going to be worse than him at mis identifying transitory vs non transitory inflation...probably not!!) - the only way that I can reason why he has stayed is political - I mean why else would you put up with the crap he is dealing with, just in order to be the guy at the head of the Fed when financially you don't need the job? What is he afraid of if he retires?
Powell made his moolah at Carlyle Group and Severn Capital Partners. He has long been interested in economic policy and institutional design, dating back to his move from Dillon Read into the Treasury in 1990 to work on debt management, bank failures, and market regulation.
Yip and at 72 give it up - you've made your money and if you have not made the professional impact you wanted to then in my opinion you've missed your shot. (I can get guys/girls running for political positions in their 70's, but not roles like Powells).
If he turns 75 and dies of cancer a year after retiring, I would classify him as a fool. ie money and power have been the driving forces in his life. If you read the proverbs (ie the most ancient form of wisdom we have in the western world) that is what we should avoid the most (spending your life chasing money and power).
He would have missed out on 10 years of quality fly fishing while he was worrying about $%@%@ up yet another monetary policy decision years after the normal person has long since retired.
Or it could be that he sincerely believes that he knows best for everyone. The reality is that central bankers really are masters of the universe in terms of the power they wield. The question is do they really deserve that power as unelected bureaucrats. Not an easy question to answer.
What if Powell is not retiring because he cares for what's best for the average American, hence he doesn't want to be replaced by a Trump pawn ?
Powell doesn't have that power Dr Y. They serve fixed 4‑year terms.
Trump wears the pants.
His term is up this year (He started the current term in 2022) and the President has to nominate him to continue and the Senate committee have to confirm it. Trump is trying to bulldoze the process, but we can be certain Powell won't be Trump's nomination based on current events, and a patsy will be put forward. What if the Senate refuses to confirm him?
The same person criticising the expense of the Fed offices renovations is himself blowing $750m on a pretentious ballroom no one wants. Text book hypocrisy.
Trump’s new White House ballroom is being funded primarily by private donors and Trump himself, not by direct taxpayer appropriations.
It's still a pointless waste of money which is what Trump claims the Fed reno is. At least the Fed has a purpose.
The renovation of the Fed's HQ is currently budgeted at roughly USD2.4-2.5 billion. The renovation is being paid for by the Fed itself, The Fed is a self‑funding institution; it finances its operations, including the headquarters renovation, mainly from interest income on securities (Treasuries, MBS) held on its balance sheet and from fees charged to banks for services.
So you can argue that it's nobody's business how the Fed spends its money. Regardless, the Fed's actions affect almost everyone.
The Fed is a truly good representation of 'ruling elite.'
I can imagine some ancient Greek people like you saying the same thing about the Parthenon.
As it ever was …,
Is this basically the same thing that Orr was saying before he was moved on?
Orr would say that, wouldn't he.
What he did in 2020/21 however...
In March 2020, the Fed set the formal reserve requirement ratio on most transaction deposits to 0% and it remains at 0%.
OK, people will say banks are still constrained by other liquidity and capital requirements, and many other jurisdictions still impose non‑zero reserve requirements.
But that's not the point.
https://www.federalreserve.gov/publications/2020-ar-Record-of-Policy-Ac…
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