On Sunday evening, news broke that the Trump administration was targeting Jerome Powell — the Federal Reserve chair, whom President Trump has been raging about for months — with a highly dubious criminal investigation into supposed financial improprieties.
Usually reserved in his public statements, Mr. Powell posted a video bluntly calling the allegations a dishonest attempt at revenge for the Fed’s refusal to simply follow the president’s wishes.
The episode is a shocking violation of the central bank’s historical independence, one that puts the United States in league with authoritarian nations careening toward financial ruin.
On Monday, markets reacted with something along the lines of “meh”: The dollar and stock prices edged down, while gold prices and interest rates rose.
Mr. Trump’s attack on the Fed is a breathtaking departure from precedent, a dangerous and scary power grab, but it’s already backfiring.
If anything, this latest episode has weakened his ability to bend the institution to his will, at least in the short run. It definitely increases the chance that Mr. Powell, whose term as chair ends in May, but whose appointment as a board member does not, will remain at the Fed longer than he might otherwise have.
It will also raise the hurdle for whoever Mr. Trump nominates as the next Fed chair. And it will make other members of that body a lot less likely to go along with the president’s agenda.
Mr. Trump’s attempt to tighten control of the central bank has many international precedents, all of them depressing.
In 2010, Argentina’s president, Cristina Fernández de Kirchner, pressured the head of her country’s central bank to heed her orders. When he refused, she accused him of abuse of authority and dereliction of duty and forced him to defend his decisions in court. Economic disaster ensued.
President Recep Tayyip Erdogan of Turkey has, like Mr. Trump, long been obsessed with low interest rates, and he once accused those who defend high rates of committing treason.
He fired multiple central bank governors and initiated at least one criminal investigation. Duly intimidated, the central bank did what he wanted, helping to drive inflation as high as 85 percent.
Despite Mr. Trump’s efforts, the United States is not Argentina or Turkey.
Part of the reason is Jay Powell. In 2019, I was sitting just a few feet away from Mr. Powell at the Fed’s Jackson Hole conference when Mr. Trump tweeted, “who is our bigger enemy, Jay Powell or Chairman Xi?”
While quaint by the standards of today’s White House, at the time it felt like an outrageous provocation. Mr. Powell did not take the bait.
As recently as November 2024, Mr. Powell was saying as little as possible, replying simply “no” when asked whether he would resign if requested to do so by Mr. Trump. That restraint is what made the video he released on Sunday night so powerful. This is not a man looking to become a resistance hero.
When Mr. Powell’s term as chair ends in May, he could stay on as a governor — and one of 12 voters on monetary policy — through January 2028. With threats intensifying, the case for his continued presence as a quiet but firm defender of Fed independence grows only stronger.
