Trump is taken aback by an unexpected show of independence from the Federal Reserve

Jerome Powell's Stand for Federal Reserve Independence Surprises Trump Administration

President Trump greets Jerome Powell in 2017 after nominating him as Federal Reserve Chair. (Alex Brandon / Associated Press)

Unexpected Statement from Powell

On Sunday evening, White House staff were taken aback by a post on the Federal Reserve’s official social media, where Chair Jerome Powell delivered a direct and unambiguous address.

Speaking in front of the American flag, Powell asserted that President Trump was using the Justice Department as a tool to pressure him. He firmly stated that such tactics would not succeed this time.

According to sources confirmed by The Times, the West Wing had no advance notice of Powell’s message—another demonstration of the Fed chair’s determination to maintain the central bank’s autonomy, setting him apart in Trump’s Washington.

Powell’s remarks came in response to grand jury subpoenas served to the Fed on Friday, which were linked to his congressional testimony over summer about construction at the Reserve.

“The threat of criminal prosecution is a result of the Federal Reserve setting interest rates based on our independent judgment of what best serves the public, not the president’s wishes,” Powell declared.

“This is about whether the Fed can continue to set rates based on data and economic realities, or if monetary policy will be dictated by political influence or coercion.”

Further Reading

Ongoing Tensions Between Trump and Powell

For months, President Trump and his advisors have openly criticized Powell’s approach to interest rates, insisting that rates should be cut more aggressively. Trump has even threatened to dismiss Powell, a move widely considered illegal by legal experts and Powell himself, though he has not followed through.

The Trump administration is currently arguing before the Supreme Court that the president should have the authority to remove leaders of independent agencies at will, despite previous Supreme Court decisions affirming the central bank’s unique independence.

The Justice Department’s decision to subpoena the Fed over a $2.5 billion renovation project—updating two buildings that have not been modernized since the 1930s—comes at a pivotal moment for the U.S. economy, which is sending mixed signals about its health.

Only 50,000 jobs were added last month, fewer than in November, even as unemployment dropped slightly to 4.4%—its first decline since June. These numbers suggest that hiring remains sluggish, even as inflation slows and growth accelerates.

Recent government data showed inflation fell to 2.7% annually in November , down from 3% in September, while third-quarter economic growth unexpectedly rose to an annual rate of 4.3%.

Lingering Uncertainty and Legal Challenges

The extended government shutdown disrupted data collection, casting doubt on the reliability of recent figures . Meanwhile, questions remain about the legality of over $150 billion in tariffs imposed on China and other countries under the International Emergency Economic Powers Act, which is under Supreme Court review .

As inflation has eased, Powell’s Fed has gradually reduced the federal funds rate—the benchmark for interbank lending and the main tool for managing inflation and growth. The rate was held steady at 4.25% to 4.5% through August, before a series of autumn cuts brought it down to 3.5% to 3.75%.

Trump, however, has pushed for even deeper cuts, calling for rates to drop to nearly 1% —a level last seen during the early pandemic in March 2020. The Fed began raising rates in 2022 as inflation surged and proved difficult to control.

Mark Zandi, chief economist at Moody’s Analytics, believes there is room to lower the federal funds rate to 3%, which he considers appropriate for a stable economy that is neither overheating nor slowing.

However, Zandi warns that undermining the Fed’s independence to force lower rates would be dangerous.

“There’s no benefit to that—only risks, which could range from higher inflation to a weakened economy and even a financial crisis,” he cautioned.

Zandi also noted that the Supreme Court’s decision on whether Trump can remove Federal Reserve Governor Lisa Cook —whom Trump tried to oust last year over disputed mortgage fraud allegations—will be pivotal.

While Powell’s term as chair ends in May, his role as a governor, which allows him to influence interest rate decisions, continues until January 2028. A criminal indictment related to the construction project could give Trump grounds to remove him entirely.

“Whether Powell remains on the board after May will be significant,” Zandi said.

The degree of independence the Fed maintains is crucial, he added, as global investors rely on the central bank to keep inflation in check—otherwise, the government may face higher borrowing costs for long-term bonds. So far, the subpoenas have had little impact on bond prices.

“If the bond market fears rising inflation, we could see a sell-off and a spike in long-term rates—that’s a crisis scenario,” Zandi explained.

Even if the worst outcomes are avoided, Zandi believes it will take time for the Fed to restore its reputation as a politically neutral institution.

“I doubt investors will easily forget this episode,” he said. “Ultimately, it will depend on who Trump selects as the next Fed chair and how that person approaches the role.”

Political Reactions and Congressional Scrutiny

Lawmakers from both parties have raised questions about the motives behind the Justice Department’s investigation.

Read more: Fed Chair Powell says Justice Dept. has subpoenaed central bank, threatens criminal indictment

Senator Thom Tillis (R-N.C.), a member of the Senate Banking Committee, has announced he will oppose any Fed nominee until the legal issues are resolved.

“If there was any doubt that Trump administration advisors are actively seeking to end the Federal Reserve’s independence, there shouldn’t be anymore,” Tillis wrote on social media .

Senator Elizabeth Warren, the committee’s top Democrat, accused Trump of attempting to “install another puppet to complete his corrupt takeover of the central bank.”

“Trump is misusing the Justice Department’s powers like a would-be dictator to make the Fed serve his interests and those of his wealthy allies,” Warren stated .

Representative French Hill (R-Ark.), chair of the House Financial Services Committee, also voiced doubts about the investigation, calling it an “unnecessary distraction.”

“The Federal Reserve is led by capable individuals appointed by President Trump, and this action could undermine the ability of current and future administrations to make sound monetary decisions,” Hill said, adding that he personally considers Powell to be “a person of the highest integrity.”

House Speaker Mike Johnson (R-La.) dismissed the notion that the Justice Department was being used against Powell, telling reporters, “Of course not.”

Reporting Credits

Reporting by Wilner and Ceballos in Washington and Darmiento in Los Angeles.

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This article was originally published in the Los Angeles Times .