This is a serious matter that concerns one of the most significant people in the world of finance. Jerome Powell is the American equivalent of the president of the National Bank of Poland, Adam Glapiński. The difference is that each decision announced by the head of the Fed has a huge impact not only on the US economy, but also on Europe and Asia. It affects the quotations of company shares on stock exchanges around the world, commodity prices and currency rates.
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Jerome Powell in Donald Trump's crosshairs
Let us recall that the case that is the subject of the prosecutor's investigation concerns an expensive and valuable case $2.5 billion renovation of the headquarters of the American central bank and significantly escalates the ongoing conflict between the Trump administration and the Fed.
Jerome Powell himself announced that the Federal Reserve had received subpoenas to appear before a grand jury and indications that criminal charges could be brought by the Department of Justice. They are said to concern his testimony before Congress last summer, relating to the costs of modernizing Fed buildings. However, the head of the central bank emphasized that – in his opinion – the actions of the prosecutor's office are only an excuse to undermine the Fed's independence in monetary policy. We wrote more about the content of Jerome Powell's statement HERE.
Donald Trump has repeatedly publicly attacked the head of the Fed for – as the US president claims – the slow pace of reducing interest rates, calling Jerome Powell, among others, “stubborn donkey”. This is one of the mildest terms. The head of the American bank has long been emphasizing that the Fed conducts interest rate policy based on an assessment of the public interest, not the president's expectations.
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Jerome Powell does not intend to resign from his position due to the ongoing investigation. He explains that public service sometimes requires determination in the face of pressure. Experts warn that further undermining of the Fed's independence could have long-term market effects.
Donald Trump is putting pressure on the Fed. What will be the market consequences?
— On the surface, the allegations against Powell may seem serious because they involve a grand jury subpoena investigation. This investigation is being conducted by the District of Columbia prosecutor's office headed by Jeanine Pirro, a prosecutor loyal to Donald Trump, notes Michał Stajniak, deputy director of the XTB analysis department, in an interview with Business Insider.
The expert admits that the Department of Justice issued a decision to start an investigation, which opens the way to an indictmentbut in his opinion “after all, the chances of this happening without hard evidence seem quite slim“.
See also: Fire or sue? Donald Trump and his problem with US monetary policy
— While the Jerome Powell case is somewhat different from the Lisa Cook case involving the Supreme Court, the ultimate chances of indictments are very low. As the Fed chairman indicated, it is this an excuse to increase pressure to lower interest rates. What's more, there could also have been a desire to force Powell to publicly declare his resignation from his position on the Board of Governors after his term as head of the Fed expired, says Michał Stajniak.
The XTB expert points out that Jerome Powell's term as Fed chairman ends in May, while he may remain as governor until 2028. It was customary for the Fed chief to resign from completing his full term as governor after selecting a successor at the Federal Reserve.
The dispute between Donald Trump and Jerome Powell. A dangerous scenario for the dollar and debt
— This time, however, it may be completely different, because Jerome Powell himself reacts quite clearly to these accusations, pointing out that they are a pretext and warning against the fact that the Fed may stop reacting to data and forecasts and start making decisions based on political dictation, which conflicts with the Fed's independence. This is, of course, an extremely dangerous scenario for the American debt and the dollar – emphasizes Michał Stajniak.
He adds that Already on Monday, the dollar weakened quite clearly against most currencies.
Moreover, US bond yields remain at elevated levels despite three interest rate cuts at the end of 2025.
– Greater uncertainty also results in maintaining high interest rates on mortgage and consumer loans, which also caught the attention of Donald Trump himself – points out the XTB expert.
The dollar fell the most since 1973.
Bartosz Sawicki, an Exante analyst, also draws attention to what is happening to the American currency in the context of the war between Donald Trump and Jerome Powell.
— In the first half of 2025, the dollar fell the most since 1973. The period of the most rapid sell-off of the dollar coincided with the height of Donald Trump's attacks on the Fed. After Jerome Powell received a summons to testify in the federal prosecutor's investigation, last year's concerns about the independence of the American central bank and the fear of dismantling the institutional framework of the American economy were revived. The result is another wave of retreat from American assets and the dollar – comments Bartosz Sawicki in an interview with Business Insider.
However, not everyone loses from this. — The beneficiary of these trends are precious metals. Gold at about 2%. he is breaking all-time records. The ounce rate breached the $4,600 level for the first time in history on Monday. – says the Exante expert.
What's next? Bartosz Sawicki stipulates that however, the first strong reaction may not continue. It suggests that investors may want to wait to see how the situation develops. At this stage, there is no information about the further course of the investigation. In 2025, Donald Trump finally calmed investor fears by emphasizing that Powell's removal from the Fed was not necessary.
– A little paradoxically, the latest version of the confusion may not be to Donald Trump's advantage. The investigation could complicate the nomination of Powell's successor and raise political temperatures around the trial. Republican member of the Senate Banking Committee, Thom Tillis, has already threatened to withhold his vote until the matter is resolved. This may make it more difficult and potentially prolong the selection of one of Trump's favorites. Currently, Kevin Hassett, Kevin Warsh and Christopher Waller seem to have the highest ratings on the name exchange, points out Bartosz Sawicki.
Interest rates in the US. Will Donald Trump's pressure work?
He notes that according to the CME FedWatch Tool, after Friday's labor market data for December the cumulative probability of an interest rate cut at the three meetings that will be held at the end of Powell's term is about 50 percent. For the entire 2026, investors currently estimate cuts at 0.5 percentage points.
— A modest valuation can become a drag on the dollar over time. However, it is difficult to imagine that, in the face of pressure, Jerome Powell will change his view on monetary policy at the end of his term. Additionally, Anna Paulson, Beth Hammack, Neel Kashkari and Lorie Logan had direct influence on decisions this year. The last three of this group are decision-makers who should not currently be considered supporters of lenient policies, he sums up.
Author: Damian Słomski, journalist of Business Insider Polska
