What happens if the Fed loses its independence?
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What prompted the Trump Justice Department to subpoena the Federal Reserve?
Can you guess who President Trump is talking about here?
He's strong. He's committed. He's smart. And if he is confirmed by the Senate, Jay will put his considerable talents and experience to work leading our nation's independent central bank.
That is the president in 2017 praising Jerome Powell, his nominee for Federal Reserve chairman. What does Trump say about Powell these days? Well, here he is last November at an investment event.
He's got some real mental problems. And there's something wrong with him.
It's a little different. After their friendly start, the chairman and president had a rocky relationship during Trump's first term. Things got worse as the COVID-19 pandemic wreaked havoc on the economy and inflation skyrocketed. In 2024, when Trump ran for re-election, he said he wouldn't appoint Powell for another 10-year term. And things have only gotten worse since Trump was sworn in last January. He's called Powell a political hack, among other things.
But we have a guy that's just a stubborn mule and a stupid person that is making a big mistake.
And the president has tried to strong-arm Powell into drastically cutting interest rates. Trump has also closely scrutinized building reservations the Fed authorized that went over budget.
The Fed is supposed to sit there and say where interest rates are going and a couple of other very easy things to do. And he spent two and a half billion dollars. I think he's You know, I think he's got some problems.
Through it all, Powell has stayed mostly measured and diplomatic. Take the summer when President Trump toured Federal Reserve buildings being renovated and seemed to be building a case to fire Powell over those renovations' cost overruns.
How has President Trump influenced Jerome Powell's leadership at the Fed?
You're including the Martin renovation. That's our entire capital. You just added in a third building is what that is. That's a third building.
It's a building that's being built. No.
It was built five years ago. We finished Martin five years ago. It's part of the overall work.
Over the weekend, that changed. NPR chief economics correspondent Scott Horsley explained it on our sister podcast up first.
The Federal Reserve says it was served with grand jury subpoenas on Friday, seeking information about the multi-billion dollar makeover of the Fed's headquarter building here in Washington and testimony that Fed Chairman Jerome Powell gave the Senate Banking Committee about that project back in June.
The subpoenas prompted Powell to release an uncharacteristically strong statement.
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.
Trump has not been shy about trying to influence the Fed. And while he told NBC News he doesn't know anything about the Department of Justice investigations, members of Congress, including some Republicans, say they're concerned the independence of the Federal Reserve is now at risk. Consider this. The Federal Reserve decides monetary policy across the United States. Its decisions help shape the global economy. What happens if that independence is threatened?
From NPR, I'm Juana Summers.
It's Consider This from NPR. Adam Pozen is president of the Peterson Institute for International Economics. He studied central bank independence for a very long time. He says governments should treat monetary policymakers like surgeons or airline pilots. The patient or passenger must let them work and evaluate their performance based on the results. I asked him for his first reaction to the news of the Department of Justice's investigation.
The president or the administration is trying to intimidate a hardworking bureaucrat just trying to do the right thing. And as the chair accurately said, it's a power gambit by the president and his team to force the Fed to set interest rates and set monetary policy in ways contrary to their judgment of what's best.
I'll note that President Trump has said that he had no knowledge of the investigation.
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