"Federal Reserve News Agency": Powell received a subpoena last Friday, and after contemplating over the entire weekend, the Federal Reserve Chairman decided to "openly confront Trump."

Federal Reserve Chairman Jerome Powell breaks years of restraint, choosing to make the judicial investigation and political pressure public, directly pointing to the Trump administration's criminal charges as a threat to force the Federal Reserve to cut interest rates.

On January 12, Nick Timiraos, a reporter for the "New Federal Reserve News Agency" and The Wall Street Journal, wrote in a recent article that Powell received a grand jury subpoena last Friday, and as a lawyer, he spent the entire weekend discussing counter-strategies with advisors. By Sunday, he made the decision: to publicly disclose the investigation and respond with unusually harsh language. This move breaks the diplomatic language and neutral stance typically maintained by the Federal Reserve Chairman.

Timiraos stated, Powell's choice to make this matter public aims to prevent the previously applied pressure from continuing to be concealed. The decision to disclose the relevant investigation is clearly based on a judgment that the public has a right to know. The potential threat of a lawsuit against the current Federal Reserve Chairman is crucial information for investors and anyone trying to understand the multiple factors influencing interest rate decisions.

Some Trump allies had anticipated that the pressure would force Powell to resign before his term ends in May, but Powell's rebuttal on Sunday sent a signal that he "will not back down."

Powell's Strategic Shift: From Restraint to Public Counterattack

The criminal investigation of the current Federal Reserve Chairman is unprecedented, and Powell's response is equally unprecedented. As a lawyer, he usually chooses his words carefully, but this time he broke the neutrality he had deliberately maintained.

On Sunday evening, Powell released an unusual two-minute video statement, characterizing the Department of Justice's investigation as a direct challenge to the Federal Reserve's ability to operate independently from political control. He candidly pointed out that the threat of criminal charges arises because the Federal Reserve sets interest rates based on the best assessment of public interest, rather than "following the president's preferences."

Timiraos noted that by publicly disclosing the investigation, Powell ensures that the pressure applied privately cannot remain confidential. This decision seems to reflect his belief that the public should be aware of what is happening: the threat of prosecution against the current Federal Reserve Chairman is important information for investors or anyone trying to understand the forces influencing interest rate decisions.

Some Trump allies had optimistically believed that the pressure campaign would lead Powell to give up and resign before his term as chairman ends in May. Or at least ensure that he would leave the Federal Reserve Board at that time, which would give Trump the opportunity to fill a second vacancy on the seven-member board. Powell's separate term as a board member would allow him to remain until early 2028.

However, the video statement released on Sunday indicates that the Trump administration underestimated Powell's determination. According to The Wall Street Journal, before the news of the investigation broke, Powell had already hired Washington's top litigation law firm, Williams & Connolly, as external legal counsel, as a precaution against the government's pressure on the Federal Reserve potentially turning to legal avenues. He has also spent years cultivating allies on Capitol Hill.

Market Concerns Spread, Future Direction Faces Uncertainty

This latest escalation has caught analysts off guard, as Powell has played a key role in pushing for interest rate cuts at the Federal Reserve's last three meetings, each facing greater opposition from regional Federal Reserve Bank presidents Tim Duy, Chief U.S. Economist at SGH Macro Advisors, pointed out that if Powell is lost as a bulletproof vest, Trump's anger may quickly turn towards other members of the Federal Open Market Committee.

Eswar Prasad, an economist at Cornell University, stated, "Trump has now made it very clear that he will only accept the Federal Reserve yielding to him in its decision-making."

The current situation still carries the risk of further escalation. Trump may attempt to completely dismiss Powell on the grounds of "dereliction of duty," but this would inevitably trigger protracted litigation. At the same time, political resistance is also increasing.

Senator Thom Tillis stated that he would obstruct any new Federal Reserve official nominations until the investigation results are released. This means that the White House's pressure campaign, while trying to resolve "old issues," is creating new obstacles for future Federal Reserve personnel arrangements.

Investors are also shocked by this news; if defying the president could lead to a criminal investigation, the independence of any new chairperson will be called into question