Defiant independence from the Federal Reserve catches Trump off guard

Defiant independence from the Federal Reserve catches Trump off guard Click here to listen to this article Share via The decision by the Justice Department to subpoena the Fed over the construction project comes at a critical juncture for the U.S. economy. Trump has called for the federal funds rate to be lowered faster and to a nearly rock bottom 1%. WASHINGTON - White House officials were caught by surprise when a post appeared Sunday night on the Federal Reserve’s official social media channel, with Jerome Powell, its chairman, delivering a plain and clear message . President Trump was not only weaponizing the Justice Department to intimidate him, Powell said to the camera, standing before an American flag. This time, he added, it wasn’t going to work. The lack of any warning for officials in the West Wing, confirmed to The Times, was yet another exertion of independence from a Fed chair whose stern resistance to presidential pressure has made him an outlier in Trump’s Washington. Powell was responding to grand jury subpoenas delivered to the Fed on Friday related to his congressional testimony over the summer regarding construction work at the Reserve. “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,” he added, “or whether instead monetary policy will be directed by political pressure or intimidation.” How Trump’s pressure on the Fed could reshape global investment in U.S. assets For months, Trump and his aides have harshly criticized Powell for his decision-making on interest rates, which the president believes should be dropped faster. On various occasions, Trump has threatened to fire Powell - a move that legal experts, and Powell himself, have said would be illegal - before pulling back. The Trump administration is currently arguing before the Supreme Court that the president should have the ability to fire the heads of independent agencies at will, despite prior rulings from the high court underscoring the unique independence of the central bank. The decision by the Justice Department to subpoena the Fed over the construction - a $2.5-billion project to overhaul two Fed buildings, operating unrenovated since the 1930s - comes at a critical juncture for the U.S. economy, which has been issuing conflicting signals over its health. Employers added only 50,000 jobs last month , fewer than in November, even as the unemployment rate dipped a tenth of a point to 4.4%, for its first decline since June. The figures indicate that businesses aren’t hiring much despite inflation slowing down and growth picking up. The government reported last month that inflation dropped to an annual rate of 2.7% in November, down from 3% in September, while economic growth rose unexpectedly to an annual rate of 4.3% in the third quarter. However,...

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