Trump says he doesn't plan to remove Fed Chair Powell despite investigation

The Trump administration has opened a criminal investigation into Jerome Powell over cost overruns linked to a $2.5 bn project to renovate two historic buildings at the Federal Reserve's headquarters

US President Donald Trump on Wednesday (local time) said he does not plan to fire Federal Reserve Chair Jerome Powell, even as the US Justice Department is carrying out a criminal investigation.

 

"I don't have any plan to do that," Trump told Reuters. However, he said it was "too early" to say what he might do later. "Right now, we're in a little bit of a holding pattern with him, and we're going to determine what to do. But I can't get into it. It’s too soon. Too early," Trump said.

 

Powell’s term as Fed chair ends in May, but he can continue to serve on the Board of Governors until 2028.

 

What is the investigation about?

The Trump administration has opened a criminal investigation into Powell over cost overruns linked to a $2.5 billion project to renovate two historic buildings at the Federal Reserve’s headquarters.

 

On January 11, Powell said the Justice Department had sent grand jury subpoenas that could lead to criminal charges. These subpoenas relate to his June testimony before Congress about the renovation project.

What did Jerome Powell say?

Powell rejected claims that the investigation was linked to either his testimony or the renovation work. He also called it a consequence of not following the President's commands. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president," Powell said.

 

"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether monetary policy will be directed by political pressure or intimidation," he added.

Trump’s pressure on the Fed

Since the start of his second term in January last year, Trump has often pushed the limits of presidential power. He has openly criticised Powell for not cutting interest rates as fast or as deeply as he wanted.

 

Trump has repeatedly called for interest rate cuts and referred to him as "Too Late Jerome Powell". "A president should have something to say (about Fed policy)... I made a lot of money with business, so I think I have a better understanding of it than Too Late Jerome Powell," he said.

 

Trump has also tried to remove another Federal Reserve official, Governor Lisa Cook. Cook has challenged her dismissal in court, and the case is expected to be argued before the US Supreme Court next week.

Who could be the next Fed chair?

Trump told Reuters he was considering two people to replace Powell -- former Federal Reserve Governor Kevin Warsh and National Economic Council Director Kevin Hassett. "The two Kevins are very good... You have some other good people too, but I'll be announcing something over the next couple of weeks," he said.

 

Trump also said US Treasury Secretary Scott Bessent will not be chosen for the job, adding that "he wants to stay where he is."