Federal Reserve Chairman Jerome Powell defended the central bank’s independence as he faced his first questions about the Justice Department investigation into him.
The questions came at a press conference after a meeting of top Fed officials in which they decided not to cut interest rates. While the Fed’s latest policy action was the topic of the event, Powell was asked a number of times about the unprecedented investigation, which he has characterized as an effort by President Donald Trump to influence interest rate policy.
WHAT TO KNOW ABOUT THE DOJ INVESTIGATION INTO FED CHAIRMAN JEROME POWELL
Powell, who is known for dodging questions that involve politics, pushed back on reporters a number of times on questions about the investigation.
“I’m simply going to refer you to the statement that I made on Jan. 11, I’m not going to expand on it or repeat it … this is really about the press conference and the economy and what we did today,” Powell told the room of reporters, referring to his Jan. 11 announcement that he was facing the DOJ investigation.
Powell also refused to say whether the Fed has responded to the DOJ subpoenas. He said there is a place and a time for such questions, but not at a press conference on monetary policy.
Still, Powell did speak about the independence of the Fed in broad strokes when asked about what would happen to consumers if the central bank loses its ability to operate independently from the White House and politics.
“It’s just an institutional arrangement that has served the people well, and that is to have a separation between — to not have direct elected-official control over the setting of monetary policy,” Powell said.
Powell said that, without independence, monetary policy can be used during an election cycle to influence the economy in ways that could be politically expedient. He also pointed out that central bank independence is the norm in most advanced economies and democracies.
“And we haven’t lost it,” Powell said. “I don’t believe we will. I certainly hope we won’t — but it’s very important and the reason it’s important is that it’s enabled central banks generally not to be perfect, but to serve the public well.”
While Powell did not elaborate about specifics of the DOJ investigation in his press conference, he did deliver very strong remarks on the matter in the video statement earlier this month. He said the subpoenas were related to testimony he gave to the Senate last year about renovation cost overruns of the Fed headquarters building in Washington, D.C.
In the two-minute video message, Powell called the accusations mere “pretexts” and said the real reason for the investigation is tied to the White House’s pressure campaign to lower interest rates.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “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.”
During the press conference, Powell was also asked whether he will break tradition and opt to stay on the Fed’s Board of Governors once his chairmanship is up, although he also declined to answer that or by when he would make a decision.
Powell’s term as chairman ends this spring, but his term on the Fed board doesn’t end until 2028. Traditionally, Fed chairs retire from the board after their term is up, allowing the president to fill the vacancy, but given the investigation, some think he might opt to stay on, given his concerns about Fed independence.
But Powell isn’t the only Fed official facing pressure from the Trump administration.
This month, Powell drew headlines by attending oral arguments at the Supreme Court for a case in which President Donald Trump is testing the bounds of his power by attempting to fire Lisa Cook, who is a member of the central bank’s board of governors.
Cook, 61, stands accused by Federal Housing Finance Agency Director Bill Pulte of mortgage fraud, which led Trump to attempt to fire her. Cook successfully sued for a temporary restraining order blocking the move and has participated in Fed meetings since that time.
DOJ INVESTIGATION COULD PUSH POWELL TO HOLD ON TO HIS SEAT AT FED
Powell said Wednesday that he attended it because of how significant of a case it is for the Fed.
“I would say that that case is perhaps the most important legal case in the Fed’s 113-year history,” he said. “And as I thought about it, I thought it might be hard to explain why I didn’t attend.”
