Story perspectives

Trump Demands 1% Rates as DOJ Probes Powell

5/5/2026

Summary

Trump Targets Powell

U.S. President Donald Trump posted an image of Federal Reserve (Fed) Chair Jerome Powell on May 4, 2026, accusing him of raising rates and demanding a 1% rate despite Fed’s 3.5%–3.75% target.
Brookings monetary-policy director David Wessel warned a steep cut could raise inflation.
The Justice Department opened a probe of Jerome Powell’s testimony on Fed cost overruns, with Jerome Powell saying he will stay chair to protect Fed independence.

Summary

Powell Exit Odds

Market prices a 1.6% chance Fed Chair Jerome Powell will exit by May 14, 2026, down from 2%.
May 15 sub-market “Powell out” odds fell to 23.5% YES from 78% the day before.
New York Fed president Bill Dudley said Powell’s stay as governor should reassure investors.
Department dropped its investigation into Powell’s testimony on the Fed headquarters renovation.
Analysts rate former Fed governor Kevin Warsh’s May 15, 2026 Fed chair confirmation as less likely.

Summary

Boasberg Blocks Subpoenas

Judge James Boasberg blocked the Justice Department's subpoenas in the criminal probe of Fed Chair Jerome Powell.
Prosecutor Jeanine Pirro said she seeks to vacate the order, may appeal, and could reopen investigation if the Inspector General finds wrongdoing.
Pirro announced the case depends on the Federal Reserve Office of Inspector General's audit of the renovation overruns.
Senator Thom Tillis said prosecutors agree no crime was committed and welcomed pause.

History

Historical Context

President Carter appointed Paul Volcker Fed chair in August 1979; the board lifted the federal funds rate to a 20% peak by June 1981, pulling inflation from a 14.8% high in March 1980 to under 3% by 1983. The policy sparked political protests against the Fed. Today Jerome Powell faces a Justice Department probe of renovation costs while President Trump pressures the chair, echoing the 1979-80 independence clash.

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Trump Targets Powell

U.S. President Donald Trump posted an image of Federal Reserve (Fed) Chair Jerome Powell on May 4, 2026, accusing him of raising rates and demanding a 1% rate despite Fed’s 3.5%–3.75% target.
Brookings monetary-policy director David Wessel warned a steep cut could raise inflation.
The Justice Department opened a probe of Jerome Powell’s testimony on Fed cost overruns, with Jerome Powell saying he will stay chair to protect Fed independence.

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