Fed Chair Powell faces DOJ investigation as FOMC meeting looms. Trump’s replacement pick is expected soon. Interest rates are likely unchanged at 3.5%-3.75%.
Markets brace for Wednesday’s Federal Open Market Committee meeting. The Fed will likely keep rates unchanged. Chair Jay Powell faces mounting pressure from multiple fronts.
The central bank cut rates 75 basis points across three meetings. The federal funds rate now sits at 3.5%-3.75%. That’s the lowest level since 2022.
Powell Breaks Silence After DOJ Bombshell
Wednesday’s press conference carries unusual weight. Powell hasn’t spoken publicly since releasing a taped statement earlier this month. The Justice Department launched a criminal investigation against him.
The probe centers on Powell’s congressional testimony. He discussed the Fed headquarters renovation project. Prosecutors allege he misled Congress about costs.
Powell called the investigation politically motivated. He linked it to the Fed’s independent rate decisions. President Trump has demanded faster rate cuts.
The press conference begins at 2:30 pm on Wednesday. Powell will likely face questions about the investigation. Reporters will press him on defending Fed independence.
Trump’s Replacement Hunt Intensifies
Trump signals an imminent announcement on Powell’s successor. The president said he made up his mind in early December. He continues weighing multiple candidates.
Prediction markets show shifting favorites. BlackRock executive Rick Rieder recently overtook other contenders on Kalshi and Polymarket. Former favorite Kevin Hassett fell back after Trump expressed a preference for keeping him as chief economic adviser.
Three main contenders remain in the race. Fed Governor Christopher Waller holds a strong position. Former Fed Governor Kevin Warsh maintains support. Rick Rieder’s odds recently surged to approximately 60%.
Critical Week Ahead for Markets
Congress remains out on Monday due to winter weather. The snow day postpones several scheduled hearings.
Thursday brings crypto regulation discussions at 10:00 am. The CFTC and SEC host a joint harmonization event. The Conference Board releases its January consumer confidence survey. The Senate Agriculture Committee may mark up crypto legislation at 3:00 pm.
Wednesday delivers the main event at 2:00 pm. The Fed announces its rate decision. Powell speaks thirty minutes later. Tesla reports quarterly earnings at 4:00 pm. Investors watch for bitcoin holding updates.
Friday concludes the week with inflation data. The Bureau of Labor Statistics releases December’s Producer Price Index at 8:30 am.
Independence Under Siege
The investigation threatens Fed autonomy. Powell stated the probe represents political pressure. He emphasized the Fed’s commitment to data-driven decisions.
Senators from both parties criticized the investigation. Republican Thom Tillis vowed to oppose any Fed nominee until the matter resolves. The Supreme Court will hear arguments on related matters later this month.
Markets remain uncertain about future leadership. The new chair’s independence becomes a critical question. Investors worry about political influence on monetary policy.
The FOMC meets amid unprecedented tension. Powell’s remaining tenure faces extraordinary scrutiny. The central bank’s independence hangs in balance.