High-Stakes Showdown: Fed's Independence Under Siege

The U.S. Justice Department's investigation into a Federal Reserve renovation project, coupled with Jerome Powell's staunch defense of the Fed's independence, has heightened tensions with President Trump. Critics fear this conflict threatens the Fed's autonomy, a key pillar of U.S. economic policy, destabilizing markets worldwide.

The U.S. Justice Department has initiated an investigation into the Federal Reserve's renovation project, significantly raising tensions around the central bank's independence. This situation has prompted a strong defensive stance from Fed Chair Jerome Powell, who describes the probe as a mere 'pretext' for political control to rapidly lower interest rates.

President Donald Trump denied any foreknowledge of the Justice Department's actions but reiterated his dissatisfaction with Powell for not cutting rates quickly enough. Market analysts express concern that this escalating dispute could destabilize one of the core components of U.S. financial stability and economic policy.

The fallout is reflected in financial markets; the U.S. dollar has weakened, gold prices have reached new heights, and stock futures have declined. Market strategists warn that political interference with the Fed's independence could result in higher inflation expectations and increased borrowing costs, underscoring the critical need to maintain central bank autonomy for economic equilibrium.

(With inputs from agencies.)