Trump Slams Powell as "Incompetent or Corrupt," Pressures Early Resignation Despite Warnings of Fallout

With DOJ Investigation Underway, Trump Pressures Powell to Resign
Wall Street and Republicans Warn: "Rising Interest Rates and Market Instability"

U.S. President Donald Trump publicly criticized Federal Reserve (Fed) Chairman Jerome Powell as "incompetent or corrupt," expressing his desire for Powell to step down. This statement comes as the U.S. Department of Justice is conducting a criminal investigation into Chairman Powell, further fueling controversy over the political independence of the central bank.

U.S. President Donald Trump (right) and Jerome Powell, Chairman of the U.S. Federal Reserve (Fed). Photo by AFP Yonhap News

On January 13 (local time), during a visit to a Ford Motor Company plant in Detroit, Michigan, President Trump told reporters, "He (Chairman Powell) either does not know what he is doing, or it is something even worse." He added, "This person has a problem. We have a bad Fed chairman. He is bad in many ways, but he is particularly bad for keeping interest rates too high."

Earlier that day, prior to his visit to Detroit, President Trump also spoke with reporters in Washington, D.C., where he was asked whether the Department of Justice investigation might undermine the Fed's credibility and independence. Trump criticized Powell, saying, "He has gone over budget by billions of dollars." He continued, "So he is either incompetent or corrupt. I don't know which he is, but he is certainly not doing a good job."

This offensive comes after the U.S. Attorney's Office in Washington, D.C. launched an investigation into Chairman Powell over allegations of perjury before Congress related to construction costs at the Fed headquarters, intensifying the debate over the independence of monetary policy. In the market, the prevailing view is that this investigation is seen as pressure from the Trump administration against Chairman Powell for not actively responding to the White House's calls for interest rate cuts.

On January 11, Chairman Powell effectively declared a direct response, stating that monetary policy was under threat from political pressure. On January 12, former heads of fiscal and monetary authorities also issued a joint statement strongly criticizing the Trump administration. In this context, President Trump's remarks on this day are interpreted as a public push for Powell's early resignation. Powell's term as Fed Chairman is set to expire this May, but his term as a Fed Board member runs until January 2028.

Concerns are mounting on Wall Street and within the Republican Party about the potential fallout from undermining the Fed's independence.

Jamie Dimon, Chief Executive Officer and Chairman of JPMorgan Chase, known as the "Emperor of Wall Street," told reporters, "Everyone we know believes in the Fed's independence," adding, "Any action to undermine it is not a good idea." He warned, "Such pressure could actually raise expected inflation and result in higher long-term interest rates."

John Kennedy, a Republican member of the Senate Banking Committee, pointed out, "If you want to ensure that interest rates don't go down and must go up, just have the Fed and the administration clash publicly. We do not need this situation at all."

In this regard, Treasury Secretary Scott Bessent is reported to have conveyed to President Trump concerns that the investigation could complicate the confirmation process for the next Fed chairman and cause turmoil in financial markets. There is also speculation that even if a new Fed chairman is nominated, Powell may remain on the Fed Board and continue to exert influence.

However, federal prosecutors have made it clear that they have no plans to halt the investigation into Chairman Powell. Jeannine Pirro, U.S. Attorney for Washington, D.C., wrote on the social media platform X (formerly Twitter), "The U.S. Attorney's Office has contacted the Fed multiple times regarding cost overruns and congressional testimony issues, but was ignored. As a result, we had no choice but to proceed with legal action. This is not intimidation." She also stated, "The term 'indictment' first came from Powell himself," emphasizing, "We expect his full cooperation according to the principle that there are no exceptions before the law."