Federal judge halts subpoenas for investigation of Federal Reserve Chairman Powell, U.S. Department of Justice plans to appeal.

The Federal Court of the United States recently made a harsh ruling, blocking the federal grand jury from issuing a subpoena to the Federal Reserve Chairman Powell, which was originally part of a criminal investigation. This move is seen as a significant blow to the Department of Justice's investigation actions and may have an indirect impact on the prospects of US monetary policy. After the ruling was unsealed on Friday, the US District Attorney for the District of Columbia, Jeanine Pirro, said that the court's decision lacked legal basis and that the ruling actually provided Powell with "immunity protection." This ruling may also prolong Powell's tenure as the Federal Reserve Chairman at a political level. US Republican Senator Thom Tillis of North Carolina has said that he will block Kevin Warsh's nomination confirmation until the federal investigation is completed. If Tillis persists in his opposition, there may be a deadlock in the Senate Banking Committee during the consideration of Warsh's nomination, preventing the nomination from entering the full Senate vote stage. Analysts believe that this political game may keep Powell in office at least until his term expires in May next year. In the ruling, US District Court Judge James Boasberg, who is responsible for the case, pointed out that the existing evidence suggests that the motive behind the prosecutor's investigation was related to pressuring Powell to adjust interest rate policies, rather than based on actual evidence of crime. Boasberg wrote in the ruling, "Did the prosecutor issue these subpoenas for a legitimate purpose? The court finds that this is not the case." The judge further noted that there is ample evidence that the main purpose of these subpoenas "and perhaps the only purpose, was to harass and pressure Powell, either to make him yield to the president or to force him to resign so that a Federal Reserve Chairman who is willing to act in accordance with the president's wishes can take office." He also said that the government has not provided any evidence that Powell has committed any crimes, "other than disappointing the president." The investigation by the prosecutors reportedly focused on a multi-billion dollar renovation project at the Federal Reserve headquarters in Washington, as well as Powell's testimony before the Senate Banking Committee on the project. Pirro strongly criticized the ruling at a press conference on Friday, calling the court's decision "completely wrong," and reiterating that the Department of Justice will continue to pursue the appeals process. Meanwhile, Tillis stated on social media platforms that the ruling proves that the criminal investigation against Powell is "both weak and absurd" and described it as a "failed attack on the independence of the Federal Reserve." As of the time of writing, the Federal Reserve has declined to comment on the matter. Market participants point out that this legal dispute may indirectly affect the prospects of US monetary policy. President Trump has consistently called for further interest rate cuts by the Federal Reserve, but Powell has not taken more aggressive action as requested by the White House. If Powell continues to stay in office, the Federal Reserve's policy stance may remain relatively cautious. Additionally, the Iran conflict has further complicated the monetary policy environment. Soaring energy prices could push up inflation, reducing policymakers' willingness to cut interest rates in the short term. Several Federal Reserve officials have recently expressed relatively cautious attitudes, with only Governors Brainard and Waller explicitly supporting further rate cuts. At the market level, investors have significantly delayed their expectations of interest rate cuts. Currently, the market widely expects that the Federal Reserve may only cut rates by the end of this year, while before the outbreak of the Iran conflict, the market had expected at least two rate cuts by the end of the year.