Washington, DC — Markets React as Federal Reserve Under Legal Scrutiny
U.S. Federal Reserve Chair Jerome Powell confirmed that the Department of Justice has launched a criminal investigation into his conduct related to congressional testimony about a major renovation of the Fed’s Washington headquarters. The unprecedented move has sent shockwaves through global markets, weakening the U.S. dollar and lifting safe-haven assets such as gold and Bitcoin as traders reassess risk.
Powell, who said he received grand jury subpoenas tied to his remarks on the $2.5 billion project, characterized the inquiry as politically motivated pressure to sway monetary policy — especially interest-rate decisions — rather than a valid criminal case.
Political Pressure and Central Bank Independence
The investigation highlights deep tensions between the Federal Reserve and the current U.S. administration. Powell has repeatedly faced criticism from the president for resisting aggressive interest-rate cuts, and this legal escalation has intensified fears that the central bank’s independence could be compromised.
Several lawmakers have voiced alarm, warning that the Justice Department’s actions risk undermining confidence in key U.S. institutions. Some senators have vowed to block any new Federal Reserve appointments until the matter is resolved, and speculation is growing about potential successors who might adopt more politically aligned monetary policies.
Market Impact: Dollar Weakens, Gold and Crypto Rally
Financial markets have responded sharply to the news. The U.S. dollar index posted notable declines, retreating from multi-week highs as investors sought refuge in traditional safe havens. Gold surged to record levels, climbing above $4,600 per ounce, while Bitcoin and Ether briefly gained on increased risk appetite for alternative assets.
U.S. stock futures dropped, reflecting heightened uncertainty, and bond yields moved as investors weighed the potential for shifts in monetary policy. Currency markets from Asia to Europe saw increased volatility, with the dollar weakening against major peers.
