Closing post
Our US politics liveblog is taking up the coverage of the Federal Reserve, here:
Here’s a wrap up….
The worsening relations between the US Federal Reserve and the White House have triggered fears that the independence of America’s central bank is being threatened.
Last night, Fed chair Jerome Powell revealed that the Department of Justice had served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to his testimony before the Senate Banking Committee last June. The probe relates to the renevation of Fed buildings.
Every living former head of the Federal Reserve condemned the “unprecedented” bid by the Trump administration to weaken the central bank’s independence.
Goldman Sachs’ chief economist Jan Hatziuse captured the concerns of investors about the move, saying:
“Obviously there are more concerns that Fed independence is going to be under the gun, with the latest news on the criminal investigation into Chair Powell really having reinforced those concerns.”
Those worries have pushed the dollar down today; it has lost 0.35% against a basket of other currencies.
This helped to push gold to a new record high over $4,600 an ounce today.
The Senate banking committee’s top Democrat – Elizabeth Warren – has urged her colleagues not to move forward with the president’s nominee for the role when Powell’s term expires in May.
Ex-Fed chairs condemn Trump administration’s bid to weaken central bank
Every living former head of the Federal Reserve has condemned an “unprecedented” bid by the Trump administration to weaken the central bank’s independence, after the Department of Justice opened a criminal investigation into its chair Jerome Powell.
Ex-Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen warned similar prosecutorial attacks in other countries have led to “highly negative consequences” for the cost of living – and argued they had “no place” in the US.
They wrote:
“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” a blunt statement signed by 13 former senior officials said. “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly.
“It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
More here:
Alphabet hits $4tn valuation for first time
Over on Wall Street, Google’s parent company Alphabet has just hit a $4tn valuation for the first time.
Alphabet hit the milestone after CNBC reported Apple has picked Google’s Gemini to be the foundation for its artificial intelligence models and the next generation of Siri.
Alphabet’s share price had already jumped by 65% in 2025, as Gemini expanded its market share in the AI space.
Chipmaker Nvidia is still the most valuable company on the US market, with a $4.49tn capitalisation.
Apple is currently worth $3.83tn.
Updated
Back in the UK, ex-Network Rail boss Sir Andrew Haines has been hauled out his short-lived retirement to fill another key role in the drawn-out transition of the railway into the new Great British Railways.
Haines will chair Department for Transport Operator Limited (DFTO), the body which is bringing all of the privately-owned train operations into public hands. Currently around half of the national rail operators, from LNER and Northern to the recent addition of Greater Anglia, report to DFTO.
The incumbent DFTO chair, Richard George, will become chair of Network Rail.
Industry observers had wondered about the leadership of Great British Railways after the supposed retirement of Haines, as well as DFTO chief executive Robin Gisby, last year. But the reinstatement of Haines to a key role, alongside his former Network Rail junior and now DFTO CEO Alex Hynes, gives it all a familiar look – if potentially refuelling criticism that GBR represented a Network Rail takeover.
Under the reformed GBR, track and train operations will be integrated under a “guiding mind”, and supposedly away from regular ministerial intervention.
Transport secretary Heidi Alexander, who directly appointed Haines, said:
“With legislation now making its way through Parliament, we’re making good progress with our ambitious programme of rail reform. Richard and Sir Andrew both bring a wealth of experience, helping to improve passenger experience and operational performance, supporting the integration of our railways and building towards the world-class railway we will see under Great British Railways.”
The Wall Street Journal’s Nick Timiraos is reporting that Jerome Powell had hired “powerhouse DC firm Williams & Connolly” as his outside counsel before the DOJ subpoenas arrived on Friday – a sign he was prepared for a fight.
Powell had hired powerhouse DC firm Williams & Connolly as outside counsel before the DOJ subpoenas arrived—a sign he has been ready for whatever turns the White House pressure campaign could take.
— Nick Timiraos (@NickTimiraos) January 12, 2026
Powell hasn't sought a fight over the Fed's institutional autonomy, but Sunday's…
The deepening row between the Federal Reserve and the Trump White House is reviving memories of previous times when the US president has piled pressure on the central bank.
AJ Bell investment director Russ Mould writes:
“In the 1960s, Lyndon B. Johnson leaned heavily on then Federal Reserve chair William McChesney (‘Bill’) Martin Jr.
“Bill Martin may perhaps be best known for being accredited with the comment that it is the Fed’s job to ‘remove the punch bowl’ before the economic and stock market party gets out of hand. But some economists and historians argue he was slow to raise interest rates in the mid-to-late 1960s as President Johnson tried to fund his ‘guns and butter’ policies, with the result that inflation ran hot and the US stock market enjoyed a boom, thanks in the main to so-called ‘onics and tronics’ go-go tech stocks, which ultimately proved unsustainable.
“Martin did ultimately tighten policy, rather than cut it, but he moved most decisively after spring 1968 and Johnson’s announcement that he would not stand in the US presidential election of that year.
LBJ’s successor, Richard M. Nixon, then applied pressure on Martin’s successor at the Fed, Arthur Burns, who took the post in 1970, as he wanted to fund the Vietnam War and domestic welfare programmes.
Mould writes:
“Burns’ tenure ran to 1978, as he worked with both Nixon and Gerald Ford, and he has tended to carry the can for the inflationary outburst which did so much damage to the US economy and global financial markets for much of that decade. While the oil shock of 1973 was well beyond his control, Burns is often accused of having been too quick to cut interest rates and thus ushering in the second wave of inflation that came in the latter half of the 1970s. Paul Volcker’s hair-shirt policies, and high-teens interest rates of the early 1980s, are held in much greater esteem as they, alongside Reaganite supply-side reforms, get the credit for taming inflation and setting the US economy back on the path to prosperity.
“Keen students of history will remember that gold was one of the very few assets which provided a positive total return during the inflation-ravaged 1970s, and that the dollar lost substantial amounts of ground – the DXY (‘Dixie’) index, which measures the greenback against a basket of currencies plunged from 120 to barely 95 during Burns’ tenure at the Fed and then kept on going all the way to barely 80 under his successor, William Miller, until the Volcker monetary medicine stopped the rot.
Trump’s credit card threat knocks shares of major lenders
Donald Trump has also triggered a selloff in US credit card issuers.
The president has rattled the sector by announcing a one-year cap that would limit credit card interest rates to 10% this week.
Shares in Capital One are down 6.2% in early trading, while American Express have fallen 4.3% and Visa has dropped by 2.9%.
Citigroup are down 3% and JP Morgan have lost 1.6%.
Updated
Warren: Senate should not move forward with Trump's Fed nominees
The Senate banking committee’s top Democrat – Elizabeth Warren – has warned that her colleagues should not move forward with the president’s nominee for the role when Powell’s term expires at in May of this year.
Warren accused the president of wanting to “install another sock puppet to complete his corrupt takeover of America’s central bank”.
She added:
Trump is abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends.
This Committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair.
Reminder: Republican Senator Thom Tillis, a member of the Senate Banking Committee that vets Presidential nominees for the Fed, pledged last night to oppose any Trump nominees (see earlier post).
That’s from our US Politics Live blog:
Updated
Wall Street has opened in the red, as traders respond to the shock news overnight that US prosecutors have launched a criminal investigation into Jay Powell over a $2.5bn renovation of the Federal Reserve’s headquarters.
The Dow Jones industrial average, which tracks 30 large US companies, has fallen by 308 points or 0.6% at the start of trading to 49,195 points.
The broader S&P 500 index has dropped by 0.3%.
Paramount to nominate directors to Warner Bros board amid takeover battle
While relations between the Federal Reserve and the White House are not great, they’re also not fantastic between Warner Brothers and Paramount.
After seeing its takeover approach for Warner Bros rejected, Paramount has now announced that it intends to nominate directors to the company’s board, to help ensure that the company’s shareholders get to choose between its offer and the Netflix bid which has been accepted.
Paramount says:
We are committed to seeing our tender offer through. We understand, however, that unless the WBD board of directors decides to exercise its right to engage with us under the Netflix merger agreement (the “Netflix Agreement”), this will likely come down to your vote at a shareholder meeting.
We do not know whether that will be at WBD’s upcoming annual meeting or a special meeting. The “advance notice” window for WBD’s 2026 annual meeting opens in three weeks, and Paramount will nominate a slate of directors who, in accordance with their fiduciary duties, will exercise WBD’s right under the Netflix Agreement to engage on Paramount’s offer and enter into a transaction with Paramount.
Paramount will also push for Warner shareholders to vote on the plan to split off its TV stations into a division called Global Networks, before Netflix acquires the Studios and Streaming operations. Paramount wishes to buy both sides of Warner Brothers.
Paramount, whose sweetened offer was rejected last week, also insists that it is offering more than Netflix, saying:
Our $30 per share in cash is simply more than Netflix’s complex multi-variable consideration comprised of (a) $23.25 in cash plus (b) a number of Netflix shares currently worth $4.11 (at Friday’s close).
Gold touches fresh record highs
Gold, that classic safe-haven against inflation and geopolitical tensions, is hitting new highs as I type.
With the US dollar continuing to weaken, the price of gold is now up 2.4% today at $4,619 an ounce, having risen over the $4,600 mark for the first time early today.
Gold is glittering as Fed independence is called into question by the investigation into Jerome Powell, explains Fawad Razaqzada, market analyst at FOREX.com.
The main catalyst behind today’s move has been a surprise announcement that federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome Powell. That development immediately raised concerns around the Fed’s independence, prompting investors to sell US assets broadly and rotate into traditional safe havens. Gold and silver both surged to record levels as markets digested the implications.
According to Powell, the investigation stems from the Fed’s reluctance to align interest-rate policy with White House preferences. Gold briefly pushed above $4,600 before easing back slightly. The latest gains in precious metals, alongside a sharp drop in the dollar, come just days after a mixed US jobs report on Friday that had initially helped the greenback extend its advance.
If fears around Fed independence fade quickly, gold could see some near-term pressure as the dollar regains its footing. My base case, however, is that Powell serves out the remainder of his term and that monetary policy continues to be guided by incoming economic data rather than political influence. If that proves correct, attention should shift back to the macro picture fairly swiftly, with CPI and retail sales firmly in focus this week.
Video: US Federal Reserve chair says DOJ has threatened criminal indictment
If you missed it last night, here’s Jerome Powell’s video statement revealing that the Department of Justice has served the Federal Reserve with grand jury subpoenas.
Significantly, he added:
The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
Updated
Rupert Thompson, IBOSS chief economist, fears that longer term worries about the independence of key US institutions will be heightened by the investigation into Fed chair Jerome Powell, saying:
The move has few direct implications, but it represents yet another attack by the Administration on the Fed and can only bolster longer term worries regarding the independence of key US institutions.
Senator Elizabeth Warren made similar comments, rather more bluntly, overnight, accusing Trump of “abusing the law like a wannabe dictator”.
Trump wants to nominate a new Fed Chair AND push Powell off the Board for good to complete his corrupt takeover of our central bank.
— Elizabeth Warren (@SenWarren) January 12, 2026
He is abusing the law like a wannabe dictator so the Fed serves him and his billionaire friends.
The Senate must not move ANY Trump Fed nominee. https://t.co/3Lsoyq6wI6
Shares in US oil major Exxon Mobil are down around 1% in pre-market trading after Donald Trum threatened to sideline the company from Venezuela’s energy market.
The US told reporters last night that he didn’t like their response to his calls for oil companies to quickly re-enter the South American country.
Trump told reporters on board Air Force One:
“I didn’t like Exxon’s response. You know we have so many that want it. I’d probably be inclined to keep Exxon out.
“They’re playing too cute.”
Exxon’s CEO Darren Woods told the US president that Venezuela would need to change its laws before it could be an attractive investment opportunity, during the high-profile meeting on Friday with at least 17 other oil executives.
Updated
The boss of British Land, one of the UK’s biggest property developers, is stepping down after more than five years at the helm.
Simon Carter has run the company, which owns the Broadgate cluster of offices in the City of London and Regent’s Place in the capital’s Knowledge Quarter, since 2020. He is leaving to become chief executive of P3 Logistics Parks, an investor, manager and developer of logistics properties such as warehouses and distribution centres in Europe, which is owned by Singapore’s sovereign wealth fund GIC.
He has a 12-month notice period, and British Land has started looking for a successor.
Carter first joined British Land in 2004, working in various roles in strategy, corporate finance and treasury, before leaving in 2015 to become chief financial officer of the Wembley developer Quintain, and later the warehouse company Logicor. He returned to British Land as CFO in 2018.
He bet on the return of workers to the office following the Covid-19 pandemic, which triggered a surge in home (and then hybrid) working, constructing some large office buildings in London, as well as retail parks. British Land also built the Paddington Central cluster and is constructing a new district at Canada Water with 3,000 new homes.
Carter said:
“The contrarian calls we made post-pandemic have positioned British Land for long-term success. There is never a perfect time to move on, but I will be leaving the business with market-leading positions in London campuses and retail parks – both of which are benefitting from strong rental growth in supply-constrained markets.”
Whoever succeeds Jerome Powell as Fed chair will probably have to pledge to cut interest rates to get Donald Trump’s backing.
But given a committee of policymakers votes to set US interest rates, the chair doesn’t have full control of the decision.
Mark Allan, senior economist at BNP Paribas Asset Management, explains:
“Every Fed Chair puts their imprint on the institution. This year will see a new Fed chair, one likely to leave behind a profound change at the Fed. To win Trump’s nomination, Powell’s successor will have pledged to the President that he will ease monetary policy meaningfully. Expect an attempt to deliver on that promise.
However, the Chair is only one member of the broader FOMC, he won’t be able to walk into his first Fed meeting and order the rest of the Committee to cut rates. But, he will always take the dovish side of any policy argument.
Expect him to downplay the risks of entrenched inflation from tariffs or immigration restrictions while doubling down on the importance of getting back to full employment. Whenever the Fed is faced with a tricky choice between cutting rates, or not, investors can expect the next Fed chair is likely to push for cheaper money.”
Long-dated US government bond prices have dropped today, as investors react to the Fed situation.
This has pushed up the yield, or interest rate, on 30-year US Treasury bonds by almost 5 basis points (0.05 percentage points), to 4.861%.
Ten-year Treasury bond yields are up too, by 3 basis points, to 4.2%.
That may indicate that the markets are anticipating higher inflation in the long term, if the Federal Reserve cuts interest rates more swiftly than expeted.
JPMorgan Asset Management have flagged the risk of a steeper Treasury yield curve, meaning long-term rates would rise more than shorter ones, on expectations of more aggressive rate cuts.
US to urge G7 to move faster on rare earths
The US is to urge G7 countries to accelerate their efforts to mine their own rare earths in a bid to reduce China’s grip on the 17 soft metals vital for defence and modern life.
Ahead of a meeting of in Washington to discuss the topic, US treasury secretary Scott Bessent will tell them they “need to move faster”.
He has previously said the US is two years away from delivering its own rare earths with experts saying it can take as long as a decade to go from mine to factory floor, such is the difficulty in extracting the materials from ore.
The EU is hoping to achieve a supply in Kiruna in Swedish arctic in the next five years, with the chief executive of the LKAB mine saying China’s position was built by the West’s decision to vacate the industry in the 1980s.
“Nobody saw any future in mining, then the super-cycle started and China started to consume enormous volumes of metals,” said Jan Moström, referring to the boom at the turn of the century when China drove huge demand for commodities on the back of urbanisation.
Japan on Monday began a historic voyage to attempt to dig deep-sea rare earths at a depth of 6,000 metres to curb dependence on China with the scientific drilling boat, Chikyu leaving for the remote island of Minami Torishima in the Pacific, where surrounding waters are believed to contain a rich trove of valuable minerals.
Ahead of the G7 meeting, a US official on Sunday night said:
“Urgency is the theme of the day. It’s a very big undertaking. There’s a lot of different angles, a lot of different countries involved and we really just need to move faster.”
One intriguing question about the future of the Federal Reserve is whether Jerome Powell remains on its board after stepping down as chair, or departs.
If he did leave, that would create a vacancy which Donald Trump could use to appoint his favoured successor onto the board, and then into the chair’s seat.
Atakan Bakiskan, US economist at Berenberg, explains:
Although Powell’s term as Fed Chair ends in May, he can remain on the Board as a Governor until January 2028. That said, most chairs in the past have left the Fed once their chair tenure expired. If Powell resigns from his Governor position in June, the resulting vacancy would allow President Trump to make a new appointment. If he does not resign, someone else on the Board would need to step down for an outsider -- such as Kevin Warsh or Kevin Hassett -- to become Fed Chair.
That person could be Governor Stephen Miran. Unless Trump re-nominates him and the Senate confirms, he would have to step down from his Governor role anyway, as he is completing Adriana Kugler’s term, which expires on January 30. If, however Powell resigns, and the Supreme Court allows Trump to remove Lisa Cook from her Governor role, both Kevins could join Miran on the Fed Board. This scenario would significantly increase the likelihood of a Fed willing to cut rates, even if economic data does not strongly support such a move.
The US dollar has continued to dip through morning trading in Europe; the dollar is now down 0.35% against a basket of other major currencies.
Russ Mould, investment director at AJ Bell says the criminal investigation into Fed chair Jay Powell over a renovation of the central bank’s headquarters has “unnerved markets”, and raised questions about what might happen to the Fed once Powell steps down in May.
Mould adds:
There is a fear that Trump is meddling too much with policies that are meant to be set independently.
“The Fed bases its monetary policy decisions on various data points, and a key purpose is to keep inflation in check.
“Trump wants to lower borrowing costs, so consumers and businesses spend more money and propel the economy. However, what’s worrying markets now over Trump’s implied intervention is that the loss of Fed independence could lead to inflation getting out of control.
Goldman Sachs: Powell investigation has 'reinforced' concerns about Fed independence
Goldman Sachs’ chief economist Jan Hatzius has warned this morning that the criminal indictment threat facing Federal Reserve chairman Jerome Powell has reinforced worries that central bank independence is being undermined.
Reuters reports that Hatzius told a 2026 Goldman Sachs Global Strategy Conference:
“Obviously there are more concerns that Fed independence is going to be under the gun, with the latest news on the criminal investigation into Chair Powell really having reinforced those concerns.”
Hatzius added, though, that he expected the Fed to continue to make decisions based on data:
“I have no doubt that he (Powell) in his remaining term as chair is going to make decisions based on the economic data and not be influenced one way or the other, cutting more or refusing to cut on the back of data that could push in that direction.”
Updated
Bloomberg are reporting that Federal Housing Finance Agency director Bill Pulte was “a driving force” behind the Trump administration’s decision to subpoena the Federal Reserve, according to people familiar with the matter.
The head of the typically staid FHFA has been a vocal force within the administration, pushing controversial housing policy ideas and investigating Trump’s foes for mortgage fraud. Pulte submitted a criminal referral to the DOJ about Fed Governor Lisa Cook that is at the root of Trump’s push to fire her. The Supreme Court is set to take up the Cook case later this month.
A senior administration official said DOJ, not Pulte, is behind the subpoena which relates to Powell’s congressional testimony about Fed building renovations. The investigation is being run by the US Attorney’s Office for the District of Columbia, according to people familiar with the matter.
US Attorney for DC Jeanine Pirro signed off on the investigation into Powell, some of the people familiar with matter said.
Updated
Latest odds on Powell's replacement: a tale of two Kevins
The battle to succeed Jerome Powell as chair of the Federal Reserve is a two-horse race, according to betting on predictions site Polymarket, with both horses called Kevin.
Kevin Hassett, the director of Donald Trump’s National Economic Council, is leading the betting at 43% this morning.
Close behind is Kevin Warsh, a former member of the Fed’s board of governors, at 41%.
Current board member Christopher Waller is running third, at 8%, followed by BlackRock executive Rick Rieder at 3%.
Trump has suggested he could name his pick this month; Powell’s term ends in May.
Updated
Powell probe is 'not a good economic start for 2026'
The news that Jerome Powell is facing a criminal investigation is “shocking”, professor Costas Milas of the University of Liverpool’s management school tells us.
He explains:
Jerome Powell will definitely regret he is not living in ancient Roman times where interest rates were remarkably stable as they were set at a fixed value to reflect the local system of numerical fractions. The criminal charges against Fed Chair Jerome Powell will most likely make financial markets realise that Fed independence is under huge pressure.
As I recently noted in a blog for LSE Business Review, if financial markets lose confidence in the Fed, Fed, in turn, will lose its ability to tackle future financial crises. Not a good economic start for 2026...
Dow, S&P 500 and Nasdaq futures slide as DoJ probes Powell
The US stock market is set to open lower as investors react to the news that Federal Reserve Chair Jerome Powell said the Trump administration has threatened him with a criminal indictment.
A futures contract tracking the S&P 500 share index is down 0.75%, while Dow Jones Industrial Average futures are down 0.65%. Nasdaq 100 futures are down just over 1%.
Chris Beauchamp, chief market analyst at IG, says:
“The spat between Trump and Powell had been quiet of late, at least publicly, but the infighting has stepped up a gear following the DoJ’s investigation of the Fed. Gold has surged to a new high on the news, while US futures are weaker. This certainly wasn’t on our bingo card for 2026, but it represents a major crisis for markets and has the potential to restart worries about the dollar and US monetary policy. Earnings season might knock this story off the front page for a while, but it will now rumble along in the background.”
UK business secretary hints at help for hospitality
UK business secretary Peter Kyle has hinted the government will make an announcement for the hospitality industry “in the coming days”, amid growing pressure from pubs, restaurants, shops and hotels to reverse an impending rise in business rates.
He told BBC Breakfast this morning:
“We have been in listening mode for quite some time now...I’ve been up in Birmingham meeting the hospitality sector, I’ve been meeting people who are running pubs right the way through, as recently as just last week.
And I think that we will be talking about this a bit more in the coming days.”
He added he would be prepared to talk further on the challenges facing the hospitality industry “when we have spoken a bit more about what we will be doing in future to make sure we have a thriving pub and hospitality sector”.
It comes as chancellor Rachel Reeves faces pressure to U-turn on a Budget announcement to scale back business rate discounts over the next three years. Government sources confirmed last week that Reeves was preparing a support package that would include reductions to business rates for pubs.
Heineken CEO steps down, shares drop
Shares in Dutch brewer Heineken have dropped by 2.4% in early trading after it announced the departure of its CEO.
Dolf van den Brink will step down on 31 May; back in October, Heineken warned that profits this year will be lower than expected due to weaker growth in Europe and the Americas.
Market sentiment hit by Powell probe
European stock markets have fallen at the start of trading, as investors ponder the criminal investigation into America’s top central banker.
In London, the FTSE 100 share index is down 18 points, or almost 0.2%, at 10,106 points, having ended last week at a new closing high.
France’s CAC is down 0.2%, while Germany’s DAX is flat.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, says:
“Global markets opened on the back foot this morning, with the FTSE 100 edging lower, alongside softer European markets and US futures pointing to a muted Wall Street open later today as investors grapple with fresh political turbulence and rising geopolitical risk.
Sentiment has been shaken by news of a criminal probe into Fed Chair Jerome Powell and his claims of political pressure from the Trump administration, while unrest in Iran and talk of possible US intervention add another layer of concern.
Share of London homes sold at a loss higher than anywhere else in England and Wales
In the UK property sector, a higher proportion of homes in London were sold at a loss than any other region in England and Wales last year.
Estate agency Hamptons has reported that nearly 15% of London sellers sold for less in 2025 than they originally paid, almost double the national average of 8.7%.
London takes this unwanted title off the North East of England, where in nine of the last 10 years, sellers were most likely to make a loss.
Hamptons also reports:
Last year, the average homeowner in England & Wales sold for £91,260 more than they paid, a value increase of 41.0% over an average holding period of 9.0 years. This is £570 less than the 2024 average of £91,830.
Stronger recent price growth in Northern regions has boosted returns, meaning many sellers in the North of England achieved proportionally higher gains than those in much of the South.
Flat sellers were four times more likely to make a loss than house sellers in England & Wales (19.9% vs 4.5%).
The US dollar is extending an earlier fall against the Swiss franc; it’s now down 0.56% at 0.7965 francs to the dollar.
The dollar is also losing ground against the euro; it’s up half a cent at $1.168, its highest since last Wednesday.
Powell inquiry is "low point" in Trump presidency
The inquiry into Powell “is a low point in Trump’s presidency and a low point in the history of central banking in America,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania.
Conti-Brown added (via Reuters)
“Congress did not design the Fed to reflect the president’s daily fluctuations, and because the Fed has rebuffed President Trump’s efforts to take the Fed down he is launching the full weight of American criminal law against its Chair.”
Donald Trump told NBC News last night that he had no knowledge of the Justice Department’s actions.
The president threw in a couple of barbs at Jerome Powell, saying:
“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings.”
Updated
Republican senator: Trump advisors are pushing to end Fed independence
The criminal investigation into Jerome Powell had had an immediate fallout.
Republican Senator Thom Tillis, a member of the Senate Banking Committee that vets Presidential nominees for the Fed, has vowed to oppose any Trump nominees, including the coming choice of successor to Powell as chair, “until this legal matter is fully resolved.”
Tillis warned that the threatened indictment puts the Department of Justice’s “independence and credibility” in question.
Posting on X, Tillis warns:
If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none.
If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question.
— Senator Thom Tillis (@SenThomTillis) January 12, 2026
I… https://t.co/wDMH6twcD5
Gold hits $4,600 an ounce
Gold has hit a new high around $4.600 an ounce; it’s up over 1.5% today, pushed up by the weaker dollar.
Gold just hit a new record high of nearly $4,600 per ounce.#economy #markets #gold #investing #investors pic.twitter.com/yvBPmDX3FK
— Mohamed A. El-Erian (@elerianm) January 12, 2026
Updated
Dollar falls
The US dollar has dropped on the foreign exchange markets since news of the investigation into Powell hit the wires.
The dollar index, which tracks the greenback against a basket of currencies, is down 0.2% this morning.
This is lifting sterling; the pound has gained almost half a cent against the dollar to $1.3440.
The dollar’s weakness highlights concerns that Fed independence is at risk:
Ipek Ozkardeskaya, senior analyst at Swissquote, says:
Powell highlighted that the key issue is whether the Fed can continue setting interest rates based on economic data and evidence, or whether monetary policy will be directed by political pressure.
I’m afraid we may be moving toward the second scenario. If the Fed becomes a political tool, with its chair replaced by a government puppet, that could further weaken appetite for the U.S. dollar and U.S. bonds.
Jerome Powell's statement
Here’s the statement issued by Jerome Powell, in a video address, last night:
Good evening.
On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings.
I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law. But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.
This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.
Thank you.
Gita Gopinath, former First Deputy Managing Director at the IMF, has applauded the statement…
Well said, Chair Powell. https://t.co/i4ayWbRaYY
— Gita Gopinath (@GitaGopinath) January 12, 2026
… as has Jason Furman, former chair of the US Council of Economic Advisers:
A terrific statement from a true statesman.
— Jason Furman (@jasonfurman) January 12, 2026
I am grateful for everything Chair Powell is doing to resist this outrageous attempt by the President to use lawfare to subvert the Fed’s responsibility to pursue the objectives set for it by law—maximum employment and price stability. https://t.co/dfSq5YjN96
Justice department opens investigation into Jerome Powell as Trump ramps up campaign against Federal Reserve
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The independence and credibility of America’s central bank is under threat after the Department of Justice opened a criminal investigation into Federal Reserve chair Jerome Powell, knocking the US dollar.
In a startling development, US prosecutors have launched a criminal investigation into Powell over a $2.5bn renovation of the Federal Reserve’s headquarters, and into his testimony about the project to the Senate banking committee in June last year.
The move is a dramatic escalation in the long-simmering tensions between the Fed and the Trump White House, with the US president repeatedly rubbishing Powell for not cutting interest rates more quickly.
After news of the investigation broke last night, Powell came out fighting, insisting that he had been threatened with criminal charges because the Fed had set interest rates “based on our best assessment of what will serve the public, rather than following the preferences of the president”.
Powell’s term as chair expires in May, and Trump was already expected to appoint a more malleable successor who might lower borrowing costs.
The news that Powell is under criminal investigation has only heightened concerns that his successor could set policy for political, not monetary, reasons.
Michael Brown, senior research strategist at brokerage Pepperstone, warns that institutional confidence in the US is again called into question.
In a classic Trumpian distraction and bullying tactic, the President has upped the ante in his long-running feud with Fed Chair Powell, after the DoJ sent subpoenas to the Fed, ostensibly in relation to Powell’s testimony on renovations to the Eccles Building last year.
Let’s call a spade a spade though. This is nothing to do with building renovations, even if it would be quite ironic for a serial bankrupt property developer to try and pursue that path. Instead, it’s Trump acting like little more than a petulant child, throwing a strop yet again because he hasn’t got his own way, in this instance lower interest rates. This isn’t a construction case, but one that strikes at the very heart of Fed policy independence.
