Fed faces political 'stress test' that threatens economy, Powell says
Summary
Former Federal Reserve Chair Jerome Powell said the Fed is facing a political challenge that could hurt public trust and the U.S. economy. He defended the Fed’s independence after investigations and legal fights involving President Donald Trump’s actions against Fed officials.Key Facts
- Jerome Powell said the Fed is undergoing a political "stress test" threatening its independence and the economy.
- Powell recently stepped down as Fed chair but remains on the Federal Reserve’s board.
- The Justice Department opened the first criminal investigation ever into a Fed chair, focusing on Powell’s testimony about building renovation costs.
- Powell denied wrongdoing and called the investigation a political attempt to influence Fed policy.
- President Donald Trump has criticized Powell’s interest rate policies but denied involvement in the investigation.
- The Supreme Court will rule soon on Trump’s attempt to remove Fed Governor Lisa Cook, accused of mortgage fraud, which she denies.
- Powell said removing Fed officials for political reasons would harm the central bank’s credibility and the economy.
- The Fed faces challenges from inflation driven by an oil shock linked to the ongoing Iran war.
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