Fed Chair Jerome Powell Is Now Under Investigation, but Is It Because of His Politics?

News that the Department of Justice is investigating Fed Chair Jerome Powell has sent the markets into tumult, and left many wondering whether President Trump might soon try to fire Powell. Powell himself has claimed that the investigation is retaliation for the fact that he refuses to lower interest rates as Donald Trump would like.

The investigation is ostensibly about whether Powell is misusing funds that have been designated for renovating the Federal Reserve building, an ironic move given that Trump himself is also renovating the White House. Given the apparently thin nature of the investigation, many want to know what Powell's politics are, and whether they align with Trump's. Here's what we know.

Although he doesn't spend much of his time on directly political matters, Powell is a registered Republican. He was first appointed to the Federal Reserve board by President Obama because of his expertise in financial matters, and he was then promoted to Chair under President Trump during his first term. President Biden renewed him as chair in 2022, and his appointment is not set to expire until 2027.

It seems somewhat surprising, then, that Powell and Trump have come to loggerheads in this fashion, but Powell made it clear in a statement announcing that he was being investigated that he believed Trump was upset about their disagreements over fiscal policy.

"I have deep respect for the rule of law and for accountability in our democracy. No one — certainly not the chair of the Federal Reserve — is above the law," he explained.

"But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure," he continued. "The Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. 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."

Trump has said that he didn't "know anything" about the investigation, but he has been suggesting for months that Powell should lower interest rates faster. "He's certainly not very good at the Fed, and he's not very good at building buildings," Trump said during an interview with NBC News.

North Carolina Senator Thom Tillis, also a Republican, wrote on X (formerly known as Twitter) that this was an attack on the independence of the Fed.

"If there were any remaining doubt whether advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none," Tillis said. "It is now the independence and credibility of the Department of Justice that are in question."

While the investigation into Potwell has not led to any harsh consequences, it's an indication that Trump and his administration feel they have expansive power. With his term nearly at an end, Powell is likely hoping to serve his remaining months in office more quietly than he will now be able to.