Federal Reserve Chair Powell Under Investigation, Political Risks Rise Toward End of Term

Federal Reserve Chair Powell Faces New Political Pressure. According to the latest reports, U.S. federal prosecutors have launched an investigation into Powell regarding the renovation project of the Federal Reserve headquarters. The sensitivity of this event lies in its timing—Powell’s term will end in May this year, coinciding with the Trump administration preparing to nominate a new Fed chair.

Background and Timing of the Investigation

The core of the event

The investigation by federal prosecutors involves the renovation of the Federal Reserve headquarters. Although the details and reasons for the investigation have not been disclosed in the news, such inquiries involving government assets and funds typically relate to budget management, procurement procedures, and related issues.

The sensitivity of the timing

This investigation occurs at a particularly sensitive time:

• Powell’s term ends in May
• The Trump administration is expected to nominate a new Fed chair later in January
• Powell is controversial for his conservative monetary policy stance

Policy Disagreements Background

Pressure Powell Faces

According to relevant information, Powell has clear disagreements with the Trump administration and some Federal Reserve insiders regarding interest rate cuts.

Powell has previously stated that employment data may be overestimated, suggesting that actual employment growth is approaching stagnation. This statement reflects his concern for data accuracy and has sparked market discussions about his policy stance.

Market Reaction

Latest employment data shows December added only 50,000 jobs, below the expected 60,000. Although the unemployment rate fell to 4.4%, this “mixed signals” situation leaves the market uncertain about the Fed’s rate cut path.

Potential Impact Assessment

Political Level

This investigation could become another avenue for the Trump administration to pressure Powell. While investigations should be independent, their timing and background inevitably raise concerns about political interference in the Fed’s independence.

Market Level

• The Fed chair’s policy direction directly influences the pace and magnitude of rate cuts in 2026
• If Powell resigns early due to the investigation, the policy stance of the new chair will become a market focus
• Statements from Yellen and Mullan suggest the new chair may adopt a more aggressive rate-cutting stance

Cryptocurrency Market Correlation

The Fed’s rate cut expectations have always been a key factor affecting crypto assets. If the new chair adopts a more dovish policy, it could be positive for crypto; conversely, it may increase market pressure.

Follow-up Focus

It is expected that later this month, the Trump administration will officially nominate Powell’s successor. The policy inclination of this new chair and their relationship with Trump will determine the Fed’s policy tone in 2026. Meanwhile, ongoing developments in the federal prosecutors’ investigation are also worth monitoring, although such inquiries typically take time to yield results.

Summary

Powell’s investigation reflects the complex situation of current U.S. political and economic policies. This is not only a legal issue but also a convergence of Fed independence and political pressure. For the crypto market, the key lies in the policy orientation of the new Fed chair—markets are already preparing for a more dovish environment. The personnel changes and policy signals in the coming month will be important market indicators.