The White House and the Federal Reserve escalate their confrontation! Trump once again pressures Powell. The Justice Department's investigation may hinder Powell's succession.

President Trump of the United States has stated that if Powell does not resign from the Federal Reserve on time, he will take action to dismiss him. According to the Federal Reserve Act, the President can dismiss board members "for cause," but this standard is not clearly defined. Trump's latest remarks indicate that tensions between the Trump administration and the Federal Reserve may further escalate. Although Powell's term as Fed Chair will expire on May 15th, his term as a board member will continue until January 2028. As is customary, outgoing Fed Chairs typically resign from the institution entirely after their leadership term ends, but Powell stated in March that he intends to stay on until the Department of Justice's investigation is resolved "in a transparent and final manner." Trump stated that he has no intention of dropping the Department of Justice's investigation into Powell and reiterated the need to investigate issues related to the Federal Reserve building project. Trump also added that he hopes Kevin Wash will be confirmed as the next Fed Chair. US prosecutors raided the construction site of the Federal Reserve headquarters According to media reports citing sources, on April 14th, local time, investigators from the office of U.S. Attorney for the District of Columbia, Jeanne Piro, appeared at the Federal Reserve headquarters without prior notice and requested to inspect a construction site. Sources revealed that two prosecutors from Piro's office and a special agent attempted to enter the construction site but were denied access for reasons of safety and other approval procedures. The Department of Justice defended its review of the project. Piro stated in a statement that nearly 80% of cost overruns warranted closer scrutiny and added that this has prompted broader questions about oversight of the institution responsible for U.S. monetary policy. Robert Helf, an outside lawyer for the Fed, strongly opposed the visit in a letter to Piro's office, pointing out that a federal judge had recently decided to reject two subpoenas issued to the Fed. He wrote, "If you want to challenge that ruling, the court provides a pathway. Your attempt to circumvent the legal process is inappropriate." "I request that you commit not to attempt to communicate with my client without a lawyer present." This situation indicates that the Department of Justice has not given up its investigation of Powell. In January of this year, the Department of Justice issued subpoenas to Powell for a criminal investigation into the renovation project at the Federal Reserve headquarters. The core of this investigation revolves around the Fed's $2.5 billion renovation of two historic office buildings and the veracity of Powell's testimony to Congress last summer about the construction project. However, in a ruling earlier this month, U.S. District Court Judge Bosberg determined that the investigation seemed aimed at "harassing and pressuring Powell" to compel him to comply with Trump's demands to lower interest rates or resign from his central bank leadership position. Bosberg also upheld related rulings to quash the subpoenas against Powell. Piro has pledged to appeal these rulings. The Department of Justice investigation has become a "stumbling block," making it difficult for Wash to smoothly take over. At the same time, on April 14th, Tim Scott, a senior Republican member of the Senate Banking Committee, announced that the committee will hold a confirmation hearing for Wash, Trump's nominee for the position of Fed chair, next week. In an interview, Scott said, "Next week, we will hold a hearing, and Kevin Wash will be there. We will discuss the economy, price stability, inflation issues, and the independence of the Fed." Scott did not disclose the specific date of the hearing, but reports suggest that it will take place on April 21st. Sources revealed on Monday that Wash had submitted necessary financial disclosure documents to the Senate, marking an important step in the confirmation process. Submission of financial information is a prerequisite for initiating Senate confirmation hearings. The hearing, which was originally scheduled for this week, was postponed due to delays in the document submission. Once the Senate Banking Committee receives written responses from Wash to inquiries, formal arrangements for the hearing could begin as early as next week. This hearing will provide a platform for bipartisan senators to examine Wash's positions on economic and monetary policy. Wash has served as a Fed board member and as an economic policy advisor to Trump. Investors are particularly concerned about how Wash will balance competing pressuresfrom Trump's demands for significant interest rate cuts to economic conditions that do not yet support rate cuts in the short term. Given the multiple attacks by the Trump administration on the Fed and ongoing high inflation for over five years, any improper responses regarding interest rate questions could weaken Wash's credibility in leading the Fed. He may also face inquiries regarding his plans to reduce the Fed's balance sheet by $6.7 trillion and his views on bank regulation. A survey conducted in early March showed that 69% of economists expect Wash, as Fed Chair, to be committed to achieving the Fed's 2% inflation target. This percentage was surprisingly low, considering that Fed policymakers are generally expected to fully prioritize this target. Even if Wash performs flawlessly at the committee hearing, uncertainty remains about his path to Senate confirmation as long as the Department of Justice investigation continues. Republican Senator Thom Tillis of North Carolina has stated that he will not support any nominee until the criminal investigation is resolved, as he believes the investigation threatens the Fed's independence. While Scott expects the Department of Justice to conclude the criminal investigation into a Fed renovation project in the coming weeks, clearing the way for Wash's confirmation, and believes that Tillis, who previously opposed the appointment, will vote in favor by then, Tillis reiterated his stance on the 14th. If Wash is not confirmed by May 15th, Powell stated that he intends to serve as interim Chair and may continue to hold his other key position as Chair of the Federal Open Market Committee (FOMC) responsible for setting rates. This means that ongoing investigations by the Trump administration could not only delay Wash's confirmation but also allow Powell to retain significant control over monetary policy. At the macroeconomic level, the legal dispute between the Department of Justice and the Federal Reserve is occurring at a sensitive time when global conditions are still unstable, increasing financial market uncertainty. With energy price fluctuations sparked by Middle East conflicts and renewed inflation pressures in the U.S., the Fed's policy direction is already at a critical juncture. It is widely believed that the Department of Justice's persistent pursuit of this case has transformed into a public showdown over central bank independence. For investors, the escalation of this legal battle could not only disrupt the Fed's decision-making process but also weaken public confidence in the stability of monetary policy during crucial moments of inflation volatility. Since taking office as President of the United States for the second time in January last year, Trump has consistently urged the Fed to lower interest rates in hopes of boosting the economy and reducing government borrowing costs. Frustrated by the Fed's inaction, Trump has repeatedly criticized Powell, demanded his resignation, and attempted to dismiss Fed Governor Randal Quarles and appoint his own candidate, Judy Shelton, to the Fed Board of Governors, in an effort to increase control over the Fed. Trump and his administration's actions have heightened concerns among external observers that political pressures could weaken the independence of the Fed and have raised alarms about long-term risksthe possibility that monetary policy will no longer be centered around inflation and economic growth targets but instead influenced by political demands. As a cornerstone of the global financial system, the Fed and the U.S. dollar play a crucial anchoring role, meaning that both verbal pressure and legal threats have global ramifications.