Trump and Powell’s Tensions at the White House in 2017
No Pressure on Federal Reserve, Says Trump
In an interview with CNBC, President Donald Trump stated that he has no intention of pressuring the Federal Reserve regarding interest rates through any investigation. This claim follows a series of developments involving Jerome Powell, the Chairman of the Federal Reserve, who is facing allegations of a potential criminal investigation aimed at him by the Juststart Department.
White House Denies Investigation Claims
White House Press Secretary Caroline Levitt confirmed during a press briefing that the President did not direct the Juststart Department to launch an investigation against Powell. Former officials of the Federal Reserve have expressed their support for Powell, warning that undermining the Fed’s independence is a characteristic common to significantly weaker nations than the United States. Former Treasury Secretary Janet Yellen cautistartd against a deterioration into a “banana republic.”
Powell’s Allegations and Response
Powell released a video yesterday alleging that the Juststart Department is threatening him with a criminal investigation connected to his congressional testimony regarding renovations at the Federal Reserve headquarters last summer. He stated that department officials had even issued subpoenas intended for him to his staff. Powell has accused the Trump administration of targeting him for refusing to shape the mstarttary policy of the Federal Reserve “according to the President’s preferences.” He emphasized that the central focus must be whether the Fed can continue determining interest rates based on evidence and economic data rather than under political pressures or intimidation. Powell, who is set to conclude his term in May, affirmed that he will not bow to such pressures.
Responses from the Trump Administration
Earlier, Trump claimed in his interview that he is unaware of any ongoing investigation. When asked if this constitutes an attempt to influence the Federal Reserve on interest rates, the President firmly denied any such intention. Axios reported warnings from Treasury Secretary Steve Mnuchin to Trump, cautioning that an investigation against Powell could create turmoil and adversely affect the markets.
Support from Former Federal Reserve Chairs
A group of former Federal Reserve chairs, including Alan Greenspan, Ben Bernanke, Timothy Geithner, Henry Paulson, and Janet Yellen, issued a statement in support of Powell, criticizing the use of litigation as a means to attack the independence of the Fed. The statement, signed by more than a dozen former Fed officials, emphasized that such an assault on the central bank is characteristic of developing economies with weak institutions, with negative consequences for inflation and overall economic performance.
These former officials stressed that there is no place for such actions in the U.S., whose greatest strength lies in upholding the principle of the rule of law, which is central to its economic success. Yellen, who served as Chair of the Federal Reserve before Powell from 2014 to 2018, echoed her concerns about the potentially chilling effects of Powell’s allegations on Fed operations.
Janet Yellen’s Warning
In the CNBC interview, Yellen labeled Trump’s calls for lowering interest rates to alleviate the national debt-currently around $38.4 billion-as reckless. She argued, “The President wants the Federal Reserve to lower the rates to ease government debt repayments. I completely disagree with that; this is how you turn into a banana republic,” asserting that the assault on central bank independence echoes nations like Venezuela. Yellen, drawing from her experience with Powell, stated that there is “no chance” he is lying about the investigation, countering insinuations from Trump and his aides. She expressed surprise at the relatively calm market reaction to Powell’s statements and emphasized that there are valid concerns regarding the issue.
Meta Description: Tensions between President Trump and Federal Reserve Chairman Jerome Powell escalate as Trump denies pressuring the Fed over interest rates amidst allegations of a criminal investigation against Powell. Former officials express concern over the potential undermining of the Fed’s independence.
Tags: Trump, Jerome Powell, Federal Reserve, Interest Rates, Janet Yellen, White House, Mstarttary Policy, Economic Independence, Banana Republic, U.S. Economy, Political Pressure