The independence and credibility of America\u2019s central bank is under threat after the Department of Justice opened a criminal investigation into Federal Reserve<\/a> chair Jerome<\/strong> Powell<\/strong>, knocking the US dollar.<\/p>\n In a startling development, US prosecutors have launched a criminal investigation into Powell over a $2.5bn renovation of the Federal Reserve\u2019s headquarters, and into his testimony about the project to the Senate banking committee in June last year.<\/p>\n The move is a dramatic escalation in the long-simmering tensions between the Fed and the Trump White House, with the US president repeatedly rubbishing Powell for not cutting interest rates more quickly.<\/p>\n After news of the investigation broke last night, Powell<\/strong> came out fighting, insisting that he had been threatened with criminal charges because the Fed had set interest rates \u201cbased on our best assessment of what will serve the public, rather than following the preferences of the president\u201d.<\/p>\n Powell\u2019s<\/strong> term as chair expires in May, and Trump was already expected to appoint a more malleable successor who might lower borrowing costs.<\/p>\n The news that Powell<\/strong> is under criminal investigation has only heightened concerns that his successor could set policy for political, not monetary, reasons.<\/p>\n Michael Brown, <\/strong>senior research strategist at brokerage Pepperstone<\/strong>, warns that institutional confidence in the US is again called into question.<\/p>\n In a classic Trumpian distraction and bullying tactic, the President has upped the ante in his long-running feud with Fed Chair Powell, after the DoJ sent subpoenas to the Fed, ostensibly in relation to Powell\u2019s testimony on renovations to the Eccles Building last year.<\/p>\n Let\u2019s call a spade a spade though. This is nothing to do with building renovations, even if it would be quite ironic for a serial bankrupt property developer to try and pursue that path. Instead, it\u2019s Trump acting like little more than a petulant child, throwing a strop yet again because he hasn\u2019t got his own way, in this instance lower interest rates. This isn\u2019t a construction case, but one that strikes at the very heart of Fed policy independence.<\/p>\n<\/blockquote>\n Share<\/a><\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n Goldman Sachs: Powell investigation has ‘reinforced’ concerns about Fed independence<\/p>\n Goldman Sachs\u2019 chief economist Jan Hatzius has warned this morning that a criminal indictment threat facing the Federal Reserve<\/a> chairman would reinforce central bank independence worries.<\/strong><\/p>\n Reuters reports that Hatzius<\/strong> told a 2026 Goldman Sachs Global Strategy Conference:<\/p>\n \u201cObviously there are more concerns that Fed independence is going to be under the gun, with the latest news on the criminal investigation into Chair Powell really having reinforced those concerns.\u201d<\/p>\n<\/blockquote>\n Hatzius<\/strong> added, though, that he expected the Fed to continue to make decisions based on data:<\/p>\n \u201cI have no doubt that he (Powell) in his remaining term as chair is going to make decisions based on the economic data and not be influenced one way or the other, cutting more or refusing to cut on the back of data that could push in that direction.\u201d<\/p>\n<\/blockquote>\n Share<\/a><\/p>\n Bloomberg are reporting that Federal Housing Finance Agency<\/a> director Bill Pulte was \u201ca driving force\u201d behind the Trump administration\u2019s decision to subpoena the Federal Reserve, according to people familiar with the matter.<\/strong><\/p>\n They say<\/a>:<\/p>\n The head of the typically staid FHFA has been a vocal force within the administration, pushing controversial housing policy ideas and investigating Trump\u2019s foes for mortgage fraud. Pulte submitted a criminal referral to the DOJ about Fed Governor Lisa Cook that is at the root of Trump\u2019s push to fire her. The Supreme Court is set to take up the Cook case later this month.<\/p>\n A senior administration official said DOJ, not Pulte, is behind the subpoena which relates to Powell\u2019s congressional testimony about Fed building renovations. The investigation is being run by the US Attorney\u2019s Office for the District of Columbia, according to people familiar with the matter.<\/p>\n US Attorney for DC Jeanine Pirro signed off on the investigation into Powell, some of the people familiar with matter said.<\/p>\n<\/blockquote>\n Share<\/a><\/p>\n Updated at\u00a004.51 EST<\/p>\n The battle to succeed Jerome Powell as chair of the Federal Reserve<\/a> is a two-horse race, according to betting on predictions site Polymarket, with both horses called Kevin.<\/strong><\/p>\n Kevin Hassett, <\/strong>the director of Donald Trump\u2019s National Economic Council, is leading the betting at 43% this morning.<\/p>\n Close behind is Kevin Warsh, <\/strong>a former member of the Fed\u2019s board of governors<\/a>, at 41%.<\/p>\n Current board member Christopher Waller <\/strong>is running third, at 8%, followed by BlackRock executive Rick<\/strong> Rieder<\/strong> at 3%.<\/p>\n Trump has suggested he could name his pick this month; Powell\u2019s term ends in May.<\/p>\n Share<\/a>Powell probe is ‘not a good economic start for 2026’<\/p>\n The news that Jerome Powell<\/a> is facing a criminal investigation is \u201cshocking\u201d, professor Costas Milas of the University of Liverpool\u2019s management school tells us.<\/strong><\/p>\n He explains:<\/p>\n Jerome Powell will definitely regret he is not living in ancient Roman times where interest rates were remarkably stable<\/a> as they were set at a fixed value to reflect the local system of numerical fractions. The criminal charges against Fed Chair Jerome Powell will most likely make financial markets realise that Fed independence is under huge pressure.<\/p>\n As I recently noted in a blog for <\/a>LSE Business Review<\/a>, if financial markets lose confidence in the Fed, Fed, in turn, will lose its ability to tackle future financial crises. Not a good economic start for 2026…<\/p>\n<\/blockquote>\n Share<\/a>Dow, S&P 500 and Nasdaq futures slide as DoJ probes Powell<\/p>\n The US stock market is set to open lower as investors react to the news that Federal Reserve<\/a> Chair Jerome Powell said the Trump administration has threatened him with a criminal indictment.<\/strong><\/p>\n A futures contract tracking the S&P 500 share index is down 0.75%, while Dow Jones Industrial Average futures are down 0.65%. Nasdaq 100 futures are down just over 1%.<\/p>\n Chris Beauchamp, <\/strong>chief market analyst at IG, <\/strong>says:<\/p>\n \u201cThe spat between Trump and Powell had been quiet of late, at least publicly, but the infighting has stepped up a gear following the DoJ\u2019s investigation of the Fed. Gold has surged to a new high on the news, while US futures are weaker. This certainly wasn\u2019t on our bingo card for 2026, but it represents a major crisis for markets and has the potential to restart worries about the dollar and US monetary policy. Earnings season might knock this story off the front page for a while, but it will now rumble along in the background.\u201d<\/p>\n<\/blockquote>\n Share<\/a>UK business secretary hints at help for hospitality UK business secretary Peter Kyle <\/strong>has hinted the government will make an announcement for the hospitality industry \u201cin the coming days\u201d, amid growing pressure from pubs, restaurants, shops and hotels to reverse an impending rise in business rates.<\/p>\n He told BBC Breakfast<\/strong> this morning:<\/p>\n \u201cWe have been in listening mode for quite some time now…I\u2019ve been up in Birmingham meeting the hospitality sector, I\u2019ve been meeting people who are running pubs right the way through, as recently as just last week.<\/p>\n And I think that we will be talking about this a bit more in the coming days.\u201d<\/p>\n<\/blockquote>\n He added he would be prepared to talk further on the challenges facing the hospitality industry \u201cwhen we have spoken a bit more about what we will be doing in future to make sure we have a thriving pub and hospitality sector\u201d.<\/p>\n It comes as chancellor Rachel Reeves<\/strong> faces pressure to U-turn on a Budget announcement to scale back business rate discounts over the next three years. Government sources confirmed last week that Reeves was preparing a support package that would include reductions to business rates for pubs.<\/a><\/p>\n Share<\/a>Heineken CEO steps down, shares drop<\/p>\n Shares in Dutch brewer Heineken have dropped by 2.4% in early trading after it announced the departure of its CEO.<\/strong><\/p>\n Dolf van den Brink<\/strong> will step down on 31 May; back in October, Heineken warned that profits this year will be lower than expected due to weaker growth in Europe and the Americas.<\/p>\n Share<\/a>Market sentiment hit by Powell probe<\/p>\n European stock markets have fallen at the start of trading, as investors ponder the criminal investigation into America\u2019s top central banker<\/a>.<\/strong><\/p>\n In London, the FTSE<\/strong> 100<\/strong> share index is down 18 points, or almost 0.2%, at 10,106 points, having ended last week at a new closing high.<\/p>\n France\u2019s CAC<\/strong> is down 0.2%, while Germany\u2019s DAX<\/strong> is flat.<\/p>\n Matt Britzman, <\/strong>senior equity analyst at Hargreaves Lansdown, <\/strong>says:<\/p>\n \u201cGlobal markets opened on the back foot this morning, with the FTSE 100 edging lower, alongside softer European markets and US futures pointing to a muted Wall Street open later today as investors grapple with fresh political turbulence and rising geopolitical risk.<\/p>\n Sentiment has been shaken by news of a criminal probe into Fed Chair Jerome Powell and his claims of political pressure from the Trump administration, while unrest in Iran and talk of possible US intervention add another layer of concern.<\/p>\n<\/blockquote>\n Share<\/a>Share of London homes sold at a loss higher than anywhere else in England and Wales<\/p>\n In the UK property sector, a higher proportion of homes in London were sold at a loss than any other region in England and Wales last year.<\/strong><\/p>\n Estate agency Hamptons has reported that nearly 15% of London sellers sold for less in 2025 than they originally paid, almost double the national average of 8.7%.<\/p>\n London takes this unwanted title off the North East of England, where in nine of the last 10 years, sellers were most likely to make a loss.<\/p>\n Share of properties sold for less than their purchase price Photograph: Hamptons<\/p>\n Hamptons<\/strong> also reports:<\/p>\n Last year, the average homeowner in England & Wales sold for \u00a391,260 more than they paid, a value increase of 41.0% over an average holding period of 9.0 years. This is \u00a3570 less than the 2024 average of \u00a391,830.<\/p>\n<\/li>\n Stronger recent price growth in Northern regions has boosted returns, meaning many sellers in the North of England achieved proportionally higher gains than those in much of the South.<\/p>\n<\/li>\n Flat sellers were four times more likely to make a loss than house sellers in England & Wales (19.9% vs 4.5%).<\/p>\n<\/li>\n<\/ul>\n Share<\/a><\/p>\n The US dollar is extending an earlier fall against the Swiss franc; it\u2019s now down 0.56% at 0.7965 francs to the dollar.<\/p>\n Share<\/a><\/p>\n The dollar is also losing ground against the euro; it\u2019s up half a cent at $1.168, its highest since last Wednesday.<\/p>\n Share<\/a>Powell inquiry is “low point” in Trump presidency<\/p>\n The inquiry into Powell \u201cis a low point in Trump\u2019s presidency and a low point in the history of central banking in America,\u201d said Peter Conti-Brown,<\/strong> a Fed historian at the University of Pennsylvania.<\/p>\n Conti-Brown<\/strong> added (via Reuters)<\/p>\n \u201cCongress did not design the Fed to reflect the president\u2019s daily fluctuations, and because the Fed has rebuffed President Trump\u2019s efforts to take the Fed down he is launching the full weight of American criminal law against its Chair.\u201d<\/p>\n<\/blockquote>\n Share<\/a><\/p>\n Donald Trump told NBC News last night that he had no knowledge of the Justice Department\u2019s actions.<\/strong><\/p>\n The president threw in a couple of barbs at Jerome<\/strong> Powell<\/strong>, saying:<\/p>\n \u201cI don\u2019t know anything about it, but he\u2019s certainly not very good at the Fed, and he\u2019s not very good at building buildings.\u201d<\/p>\n<\/blockquote>\n Share<\/a><\/p>\n Updated at\u00a002.23 EST<\/p>\n Republican senator: Trump advisors are pushing to end Fed independence<\/p>\n The criminal investigation into Jerome Powell<\/a> had had an immediate fallout.<\/strong><\/p>\n Republican Senator Thom<\/strong> Tillis<\/strong>, a member of the Senate Banking Committee that vets Presidential nominees for the Fed, has vowed to oppose any Trump nominees, including the coming choice of successor to Powell as chair, \u201cuntil this legal matter is fully resolved.\u201d<\/p>\n Tillis warned that the threatened indictment puts the Department of Justice\u2019s \u201cindependence and credibility\u201d in question.<\/p>\n Posting on X, Tillis<\/strong> warns:<\/p>\n If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none.<\/p>\n<\/blockquote>\n If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question.\u00a0 \u2014 Senator Thom Tillis (@SenThomTillis) January 12, 2026<\/a><\/p><\/blockquote>\n Share<\/a>Gold hits $4,600 an ounce<\/p>\n Gold has hit a new high around $4.600 an ounce; it\u2019s up over 1.5% today, pushed up by the weaker dollar.<\/p>\n Share<\/a><\/p>\n Updated at\u00a002.08 EST<\/p>\n Dollar falls<\/p>\n The US dollar has dropped on the foreign exchange markets since news of the investigation into Powell hit the wires.<\/strong><\/p>\n The dollar index, which tracks the greenback against a basket of currencies, is down 0.2% this morning.<\/p>\n This is lifting sterling; the pound has gained almost half a cent against the dollar to $1.3440.<\/p>\n The dollar\u2019s weakness highlights concerns that Fed independence is at risk:<\/p>\n Ipek<\/strong> Ozkardeskaya<\/strong>, senior analyst at Swissquote, <\/strong>says:<\/p>\n Powell highlighted that the key issue is whether the Fed can continue setting interest rates based on economic data and evidence, or whether monetary policy will be directed by political pressure.<\/p>\n I\u2019m afraid we may be moving toward the second scenario. If the Fed becomes a political tool, with its chair replaced by a government puppet, that could further weaken appetite for the U.S. dollar and U.S. bonds.<\/p>\n<\/blockquote>\n Share<\/a>Jerome Powell’s statement<\/p>\n Here\u2019s the statement issued by Jerome Powell<\/a>, in a video address, last night:<\/strong><\/p>\n Good evening.<\/p>\n On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings.<\/p>\n I have deep respect for the rule of law and for accountability in our democracy. No one\u2014certainly not the chair of the Federal Reserve\u2014is above the law. But this unprecedented action should be seen in the broader context of the administration\u2019s threats and ongoing pressure.<\/p>\n This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress\u2019s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. 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.<\/p>\n This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions\u2014or whether instead monetary policy will be directed by political pressure or intimidation.<\/p>\n I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.<\/p>\n Thank you.<\/p>\n<\/blockquote>\n Gita<\/strong> Gopinath<\/strong>, former First Deputy Managing Director at the IMF<\/strong>, has applauded the statement\u2026<\/p>\n \u2026 as has Jason<\/strong> Furman<\/strong>, former chair of the US<\/strong> Council<\/strong> of<\/strong> Economic<\/strong> Advisers<\/strong>:<\/p>\n A terrific statement from a true statesman.<\/p>\n I am grateful for everything Chair Powell is doing to resist this outrageous attempt by the President to use lawfare to subvert the Fed\u2019s responsibility to pursue the objectives set for it by law\u2014maximum employment and price stability. https:\/\/t.co\/dfSq5YjN96<\/a><\/p>\n \u2014 Jason Furman (@jasonfurman) January 12, 2026<\/a><\/p><\/blockquote>\n Share<\/a>Justice department opens investigation into Jerome Powell as Trump ramps up campaign against Federal Reserve<\/p>\n Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/strong><\/p>\n\n
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I\u2026 https:\/\/t.co\/wDMH6twcD5<\/a><\/p>\n\n
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