There are often few surprises with Jerome Powell. At his handful of public appearances each month, the US Federal Reserve chair always sports the same softly stern expression. His voice, typically dispassionate and near-monotone, never wavers.
As one of the most powerful officials in the world, commanding a platform that has the ability to move global markets with a few words, Powell is often reserved in a way that fails to yield soundbites in this social media era: boring, even.
That changed on Sunday night. In a video statement released by the Fed, Powell looked like his usual self. Calm and composed, though without his usual black glasses frame, Powell announced the Trump administration had instigated a criminal investigation against him – and that he would not back down.
“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,” Powell said. “Public service sometimes requires standing firm in the face of threats.”
It’s almost an unusual message to come out of Washington in Donald Trump’s second presidency, but one that is unsurprising from a man who has dedicated much of the last decade to upholding the political independence of the central bank.
For years, this objective required protecting the Fed’s position above the scrum of politics. For months, Trump and his allies have sought to drag it down.
After years working in private equity, Powell first joined the Fed in 2012. A registered Republican who was appointed to the Fed’s board by Barack Obama, he swiftly built a reputation as a consensus-builder. When Trump first tapped him to chair the central bank, in 2018, he was seen as a stable, safe pick – as he was when reappointed by Joe Biden, four years later.
In an address to Princeton University’s graduating class last May, Powell expounded on the philosophy that has motivated his work. “I strongly urge you to find time in your careers for public service,” he said. “When you look back in 50 years, you will want to know that you have done whatever it takes to preserve and strengthen our democracy, and bring us ever closer to the Founders’ timeless ideals.”
The Fed was created by Congress in 1913 as independent from the president and Congress, to give it the legitimacy it needs to guide markets and manage the US economy. Economists say a politicized central bank can often negatively affect inflation, and the cost of living.
As the face of the Federal Reserve, the role of chair is one of the most delicate – and powerful – in the US government. Speak confidently about the US economy, and stock markets can soar. Say anything about unemployment or prices going up, and they can tumble.
Often a boring Fed chair is exactly what the job requires. Over his eight-year stint in the job, Powell has steered the economy through Covid, soaring inflation, and Trump’s overhaul of US trade and immigration policies.
Though some economists criticized Powell for being “dovish” about the post-Covid inflation, when annual price increases surged to 9.1% in summer 2022, he was widely praised for getting close to achieving what is known as a “soft landing”: bringing inflation down by raising interest rates, without bringing up unemployment. Last April, inflation hit 2.3%, the lowest in three years, while the unemployment rate steadied at 4.2%.
During his second term in the White House, Trump has overseen massive anti-immigration operations, lifted US tariffs to levels not seen in decades, and signed off on tens of thousands of federal government layoffs. Surrounded by a group of staunch loyalists, he met little resistance in enacting his economic policies – except when it came to interest rates.
The White House’s campaign to get the Fed to lower rates has fallen on deaf ears, and Trump has directed most of his ire on to Powell. From vitriolic social media posts to handwritten missives in thick marker, Trump has called the man he first chose to lead the Fed “a stupid person”, and floated firing him multiple times.
Powell has been unflinching in the face of these attacks. At press conferences, he politely declines to answer any question he considers political. The most he’s given away was when Trump paid a visit to active construction at the Fed’s headquarters last summer, as allies of the president attempted to stir controversy surrounding the project. Addressing reporters side by side, Powell grew visibly frustrated as Trump misreported the cost of renovations.
After a long season of restraint, it is an unprecedented criminal investigation – reportedly focused on those renovations – which appears to have pushed Powell over the edge.
In his statement on Sunday, Powell for the first time outlined the extraordinary campaign that the White House has undertaken to push the Fed to lower rates – an incredible violation of the central bank’s independence.
This criminal investigation is simply “pretext”, Powell said, noting that threat of the criminal charges comes after the Fed refused to follow “the preferences of the president”.
Powell’s term as chair is due to conclude in May. Trump, who has claimed he did not personally know about the justice department’s investigation, says he has already picked a successor.
But the launch of a criminal investigation has thrust the world’s most influential central bank into uncharted waters. The latest escalation of Trump’s campaign against the Fed is bigger than an attack on just one person, according to Powell: the future of the entire institution is on the line.
