The Trump administration’s escalating campaign against Federal Reserve Chairman Jerome Powell is more than a personal feud over interest-rate policy.

It is an attack on the independence of the Fed, which wields enormous influence over the U.S. economy. The Fed has played a crucial role in keeping American monetary policy credible and the markets steady, as well as stabilizing inflation.

The Department of Justice is threatening to indict Powell over Congressional testimony he gave last summer about a Fed building project. It’s part of a criminal inquiry against Powell over details of the project to renovate the central bank’s headquarters.

Powell rebuffed President Donald Trump publicly in a tour of the renovation last July, claiming the president — who was standing next to him — had included the cost of a third building that had already been completed in his higher calculation.

Trump doesn’t like that kind of direct confrontation. Powell says the threatened indictment is a “pretext” for vindictiveness.

Trump claims to have no knowledge of the department’s actions, adding, “he’s not very good at the Fed, and he’s not very good at building buildings.”

"You announce unbelievable numbers and the market goes down," Trump said Tuesday at the Detroit Economic Club. "When the market goes up they should lower rates."

Trump has pushed Powell to lower interest rates — including threatening to fire him — since he took office to stimulate the economy and offset frustration over rising prices and the cost of living.

The Fed cut interest rates in three of the final four months of 2025.

But the Fed’s role is to maintain neutrality amid the chaos or pressure of shifting political sands.

It should continue to do so.

The threatened indictment puts the DOJ's “independence and credibility” in question, Republican Sen. Thom Tillis of North Carolina, a member of the Senate Banking Committee that vets presidential nominees for the Fed, said on X.

Powell called the action unprecedented in a video posted online, and alleged it was a “consequence for setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”

Since its creation, the Federal Reserve has operated with a degree of autonomy from political pressure so that economic decisions, such as setting interest rates, are based on data and long-term economic wellbeing — or at least that’s supposed to be how it works.

The Fed’s policy is not to be influenced by political whim or an election cycle. It is supposed to operate within a practical and stable governance structure to keep the economy from swinging wildly in response to any political change — and to maintain confidence in the U.S. dollar.

The Fed’s relative stability also helps anchor inflation expectations.

Last Monday, bond yields edged higher and the value of the U.S. dollar declined, likely in reaction to news of the threatened indictment against Powell.

Further pressure to subordinate monetary policy to presidential political directives would weaken the U.S. economy and the global financial system.

Trump has made this a personal vendetta that threatens to coerce independent actors into political compliance.

The Fed should be allowed to work as it was designed and set policy based on economic conditions and analysis, not politics or presidential preference.

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