WASHINGTON — President Donald Trump’s conflict with Federal Reserve Chair Jerome Powell has intensified, leading to a Department of Justice (DOJ) investigation. This situation has sparked concern among Senate Republicans, where Trump’s support is crucial for approving his next Federal Reserve nominee. Powell’s term ends in May, and a new chair will need broad GOP backing.
Senator Thom Tillis from North Carolina, on the narrowly split Banking Committee, announced he will reject any nominee for Powell’s position if Trump undermines Fed independence. Tillis stated, “If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none.” Tillis plans to oppose confirming any Fed nominee until the legal issue is resolved.
Powell Responds in a Video
Trump, since January, has repeatedly criticized Powell, urging rapid interest rate cuts and implying he wanted to replace him. Powell revealed in a video that DOJ officials served the Federal Reserve with grand jury subpoenas, possibly leading to criminal charges related to his Senate testimony. Powell claims the investigation is politically motivated, challenging the Fed’s independence in setting interest rates.
Powell emphasized, “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.” Trump initially nominated Powell in 2017, citing his leadership and policy skills. Powell’s nomination was confirmed by the Senate with an 84-13 vote in 2018.
Tillis Leverage on Committee
Trump’s future nominee for Fed chair must advance through the Senate Banking Committee, which includes 13 Republicans and 11 Democrats. Tillis holds significant sway to block Trump’s nominee if Democrats also oppose. Massachusetts Senator Elizabeth Warren criticized Trump, accusing him of misusing DOJ powers to control the Fed. Warren warned against proceeding with any Trump Fed nominee.
Alaska Senator Lisa Murkowski stated the DOJ investigation is an “attempt at coercion,” adding, “The stakes are too high to look the other way: if the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer.” Senate Minority Leader Chuck Schumer labeled DOJ’s actions as bullying typical of Trump, arguing that independent voices face unjustified probes.
Former Federal Reserve officials and economic advisors released a statement stressing the importance of Fed independence for economic stability. They condemned the inquiry into Powell as an unprecedented attack undermining U.S. monetary policy.
White House press secretary Karoline Leavitt stated that Trump has the right to criticize Powell, asserting, “Look, the president has every right to criticize the Fed chair. He has a First Amendment right, just like all of you do.” She noted that the DOJ will determine any criminal implications for Powell.
