Executive Branch vs Federal Reserve

The administration has continued to increase pressure on the Federal Reserve to lower interest rates. A former Fox News host, Jeanne Pirro, has initiated criminal proceedings against Jerome Powell based on testimony about the Federal Reserve plans to upgrade current facilities.

Chairman Powell has pushed back strongly against the implication that there was any impropriety and has connected this perspective to what he views as political pressure to lower interest rates. He is standing firm regarding Federal Reserve independence.

This issue bears watching. If there is a significant shift in Fed policy (such as a collapse in interest rates due to Federal Reserve actions), this can have a significant effect on both fixed income and equity markets. We are watching carefully and will adjust as needed.

A recent article highlighted this issue on CNBC. Excerpts below.

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“President Donald Trump on Tuesday slammed Federal Reserve Chair Jerome Powell as either “incompetent” or “crooked,” even as his Department of Justice faces growing opposition over its criminal investigation of the central bank leader.

Trump threw his latest punch at Powell after being asked whether the unprecedented action undermines confidence in the Fed, which has long enjoyed independence from the executive branch.

“He’s billions of dollars over budget,” Trump said, apparently referencing costs related to a multibillion-dollar renovation of the Fed’s Washington headquarters, which is at the center of DOJ’s probe.

“So, he either is incompetent or he’s crooked,” Trump said. “I don’t know what he is. But he does a – certainly he doesn’t do a very good job.”

Trump’s comments to reporters outside the White House came as bipartisan criticism of the investigation, and support for the Fed’s independence, continue to grow.”

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Source: https://www.cnbc.com/2026/01/13/trump-powell-fed-dimon-pirro-doj.html