Former Federal Reserve chiefs round on Trump’s ‘vindictive’ Powell salvo
Donald Trump’s unprecedented decision to open a criminal indictment against Federal Reserve chair Jay Powell has been rounded on by all of his living predecessor, who accused the President of running the United States like a developing economy.
In a highly unusual joint intervention, Janet Yellen, Ben Bernanke and Alan Greenspan rebuked the President’s most dramatic salvo on the US central bank, branding it an “unprecedented attempt to use prosecutorial attacks to undermine [Federal Reserve] independence”.
“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” they wrote in a statement also signed by a cross-party group of former treasury secretaries and senior economic advisers. “It has no place in the United States, whose greatest strength is the rule of law, which is at the foundation of our economic success.”
Powell revealed on Sunday that the US Justice Department had served the Fed with grand jury subpoenas late last week, which threatened a criminal indictment relating to evidence he gave to the Senate banking committee in June 2025 regarding renovations to the central’s bank’s Washington office.
In a robust video statement, the Federal Reserve chair claimed the legal action “was not about [his] testimony in June or about the renovation of the Federal Reserve buildings”.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates on our best assessment of what will serve the public rather than following the preferences of the President,” he said. “This is about whether the Fed will be able to set interest rates based on evidence and economic conditions or whether instead monetary policy will be directed by intimidation.”
The subpoenas are the latest of several attacks that Trump has waged on the Fed’s independence since returning to the White House last year.
In August, Trump unsuccessfully demanded central bank governor Lisa Cook be removed from office, accusing her of making false statements on mortgage agreements. The following month, he installed a close ally onto the bank’s rate-setting Federal Open Market Committee (FOMC), in a bid to force through faster and deeper interest rate cuts.
The flashpoints – the latest of which came despite Powell’s term concluding in May – have been accompanied by regular missives launched by the President on Truth Social, his social media platform, in which he calls the chair ‘Jerome “Too Late” Powell’ over the Fed’s cautionary approach to cutting rates.
Federal Reserve attack ‘truly unprecedented’
The US dollar fell some 0.36 per cent against a basket of major currencies, while the spot rate of gold climbed as much as 2.4 per cent as traders digested the President’s most dramatic salvo of a long-running feud with the Fed and its chair.
Gold’s jump carried the precious metal to a fresh all-time high of $4,616 per troy ounce – breaking $4,600 mark for the first time in its histor – amid fears that the erosion of Federal Reserve independence could unleash a fresh bout of inflation. Silver – another safe haven asset often used as a hedge against inflation – also climbed sharply.
“This is truly unprecedented,” said Neil Wilson, UK investor strategist at Saxo. “You could call it vindictive by Trump, seeing as Powell is leaving in May anyway, but really this is about Trump making it clear to who comes next as Fed chair and to existing policymakers on the FOMC that the White House will set interest rates.”
Investors’ worries were also evident in foreign exchange markets, where the dollar suffered a rapid sell-off as markets accelerated a trend of hedging away from the dollar in the face of Trump’s capricious policymaking.
Goldman Sachs chief economist Jan Hatzius warned the indictment confirmed worries that the Federal Reserve’s independence is being undermined.
“Obviously there are more concerns that the Fed independence is going to be under the gun, with the latest news on the criminal investigation into chair Powell really having reinforced those concerns,” he told the 2026 Goldman Sachs’ Global Strategy conference.
“I have no doubt that he [Powell] in his remaining term as chair is going to make decisions based on the economic data and not be influenced one way or the other, cutting more or refusing to cut on the back of data that could push in that direction,” he added.