At a Glance
- Fed Chair Jerome Powell says the Justice Department has threatened him with criminal indictment over Senate testimony about Fed building renovations.
- Powell claims the threat stems from the Fed setting rates “based on our best assessment of what will serve the public, rather than following the preferences of the President.”
- Gold and silver hit fresh all-time highs, while Bitcoin spiked to $92,400 before slipping back above $91,000.
- Why it matters: Markets are bracing for more volatility as the White House-Fed clash deepens ahead of the next FOMC meeting in two weeks.
President Trump and Federal Reserve Chair Jerome Powell’s year-long feud has entered uncharted territory after Powell revealed that the Justice Department served the central bank with subpoenas and floated possible criminal charges.
The Escalation
Speaking publicly for the first time since Trump’s repeated attacks, Powell tied the legal threat to the Fed’s refusal to cut interest rates to the White House’s desired level. The subpoenas center on testimony Powell gave last year to a Senate committee regarding renovations to Federal Reserve buildings.
“The threat of criminal charges is a consequence of the Fed setting rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell stated.
The Kobeissi Letter, a widely followed markets newsletter, noted that this marks the first time Powell has “fought back” since Trump began criticizing him after winning the 2024 election. For the previous 12 months, Powell had responded to questions about Trump’s remarks with a standard line: “I do not any response or comment.”
Markets React
Investors sought safety in precious metals, pushing both gold and silver to record highs. Bitcoin joined the risk-on move, leaping to $92,400 before easing to trade just above $91,000 at press time.
Analysts warn the standoff is far from over. With the next FOMC meeting scheduled in two weeks, expectations have shifted toward a pause in rate cuts, amplifying tensions between the central bank and the White House.
Timeline of Trump-Powell Clash
| Date | Event |
|---|---|
| Late 2024 | Trump wins presidency and immediately calls for lower rates |
| 2025 | Trump labels Powell “too slow” and hints at firing him |
| January 9, 2026 | DOJ serves Fed subpoenas over building-renovation testimony |
| January 12, 2026 | Powell publicly links indictment threat to rate-setting independence |
What Happens Next
Legal experts note that removing a Fed chair before the end of a term is murky at best. Trump has repeatedly threatened to demote or fire Powell, yet such action lacks clear statutory backing and could roil already jittery markets.
For now, traders are pricing in heightened volatility. The Kobeissi Letter told followers to expect the clash to “likely continue to worsen,” a sentiment echoed across derivatives desks as implied volatility on major assets ticks higher.
Key Takeaways
- Fed independence is under overt political pressure for the first time in decades.
- Powell’s decision to speak out signals the central bank will not yield on rate policy.
- Gold, silver, and Bitcoin are flashing caution as investors hedge against institutional uncertainty.
- Markets face a potential inflection point at the upcoming FOMC meeting if policymakers opt to pause cuts amid White House criticism.
Ethan R. Coleman reported for News Of Losangeles.
