Mon, 12 Jan 2026

Mon, 12 Jan 2026 Faisal Islam: Trump faces extraordinary moment in spat with Fed chair

Jerome Powell's public response to a DoJ investigation could be a seismic moment for Donald Trump's presidency.

* Federal Reserve Chair Jerome Powell made an unscheduled video statement on social media, sparking concerns it could be a deepfake.
* Powell revealed that the Department of Justice had served the Fed with criminal indictments over his testimony on building works at the Fed's headquarters.
* However, he also said publicly what he had not before: that the DOJ moves were part of the administration's ongoing pressure to influence interest rates.
* Powell stated that the threat of criminal charges is a consequence of the Fed setting interest rates based on evidence and economic conditions, rather than following the president's preferences.
* He warned that this is about whether the Fed will be able to continue to set interest rates independently or whether monetary policy will be directed by political pressure.
* The move has significant implications for global markets, as Federal Reserve independence is seen as a key anchor for stability.
* US interest rates are decided by a committee vote, not just the chair, but Powell's term is up in May and he may be replaced by a Trump-friendly economist.
* Some analysts fear that the administration could use the Fed's global market tools to coerce other countries in its tariff war.
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