Federal Reserve Chair Jerome Powell said late Sunday that the central bank had received grand jury subpoenas from the Department of Justice. He described the move as a part of a broader effort to pressure the central bank on monetary policy.
Prominent economists and business leaders are reacting as the news hit markets at the start of the trading week. They weighed in on how the DOJ move affects the Fed’s independence, a question also raised by Sen. Thom Tillis. On Sunday, the Republican said he would oppose nominees for the Fed.
“If there were any remaining doubt about whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said in a statement.
Here’s what leaders in economics and business are saying:
Mohamed El-Erian
IMF
Prominent economist Mohamed El-Erian called for Powell’s resignation months ago to protect the Fed’s independence amid the feud with Trump.
On Sunday, El-Erian wrote on X that the inquiry into Powell is damaging for the US central bank.
“For those of us who value the operational autonomy of central banks, the risk is that this situation could expose deeper issues — further undermining the credibility of a Fed whose public standing is already fragile,” wrote El-Erian, who is a former co-chief investment officer at Pimco.
Reid Hoffman
LinkedIn cofounder Reid Hoffman raised concerns about the Fed’s independence.
“Question to all those who said Trump would be better for the economy: is attacking the Fed’s independence what you had in mind?” wrote the prominent Democratic donor on X.
Peter Schiff
Peter Schiff, the chief economist at Euro Pacific Asset Management, attributed the gold price surge to fresh record highs on Sunday evening to the investigation into Powell.
“I am not a fan of Powell, but I agree with him on Trump’s motivation,” Schiff, whose firm managed $1.4 billion last year, wrote on X.
In April, Schiff said Trump’s next Fed Chair pick would be a “loyal soldier.”
Michael A. Gayed
Michael A. Gayed, a renowned investment manager, said direct action against a sitting Fed Chair is “without modern precedent,” in an edition of his Lead-Lag substack report published on Sunday evening.
The inquiry into Powell raises questions about whether the long-standing boundaries between fiscal power, prosecutorial authority, and monetary independence are beginning to blur, Gayed said. The concern was less about any single case and more about the future precedent it may establish.
“Should investors conclude that future Fed officials could face legal consequences for policy decisions that conflict with political priorities, the incentive structure governing monetary policy could change,” said Gayed.
That shift could increase inflation risk premiums and weaken confidence in long-duration financial assets tied to stable policy expectations, he added.
Victoria Greene
Victoria Greene, the chief investment officer at G Squared Private Wealth, told CNBC in an interview on Monday that her firm is advising its clients to remain relaxed and avoid knee-jerk reactions to headlines.
“See how this plays out. It could be a little bit of a dip buying opportunity, we see multiple 5-10% pullbacks here,” said Greene.
“FED independence is something we’re going to have to watch, especially what happens with bond yields,” she added.
