President Trump intensified criticism of Federal Reserve Chair Jerome Powell on Tuesday, calling him “incompetent” or “crooked” while threatening legal action over Fed operations.
The renewed attacks heighten concerns about political interference in monetary policy decisions that could affect interest rates, inflation expectations and market stability as Powell’s term expires in May.
Key Takeaways
- Trump threatens to sue Powell for “gross incompetence”
- Global central bankers rally behind Fed independence
- Gold prices surge on monetary policy uncertainty
Market Reaction & Context
Gold steadied after surging on worries over Federal Reserve independence, with the precious metal benefiting from uncertainty around U.S. monetary policy 7. The dollar and bond markets showed volatility as investors weighed the implications of potential Fed leadership changes.
Central bank independence has long been viewed by markets as crucial for credible monetary policy. Any perceived political interference typically creates uncertainty around interest rate decisions and inflation targeting.
Trump’s Latest Criticism
Speaking to reporters Tuesday, Trump accused Powell of budget mismanagement, saying the Fed chair was “billions of dollars over budget” on headquarters renovations 3. The president said his administration would “probably” sue Powell for “gross incompetence” related to renovation costs 8.
“So he either is incompetent or he’s crooked,” Trump said when asked about Powell’s performance 3. The comments represent Trump’s most direct personal attack on the Fed chair since returning to office.
Global Central Bank Response
International central bank leaders voiced “full solidarity” with the Federal Reserve and Powell amid the mounting pressure 5. The unified response from global monetary authorities underscores concerns about potential erosion of Fed independence.
Wall Street Journal analyst Greg Ip warned that a criminal probe into Powell “isn’t the last attempt by Trump to corral Fed independence” 9. The comments highlight broader market fears about political influence over monetary policy decisions.
Historical Context
Trump previously clashed with Powell during his first term, frequently criticizing the Fed’s interest rate decisions on social media. However, the current attacks appear more personal and legally focused than previous disputes.
Powell, originally appointed by Trump in 2018 and reappointed by President Biden in 2022, has maintained the Fed’s commitment to data-driven policy decisions despite political pressure from both parties.
Market Implications
Investors are closely watching for signs of Fed policy shifts or leadership changes that could affect interest rate expectations. Any departure from the Fed’s traditional independence could complicate monetary policy effectiveness and market predictability.
The situation adds uncertainty to an already complex economic environment as markets assess inflation trends, employment data and the Fed’s future policy path.
Not investment advice. For informational purposes only.
References
1(2026-01-13). “Trump attacks Powell amid Fed fears: ‘Incompetent’ or ‘crooked'”. CNBC. Retrieved January 13, 2026.
2(2026-01-13). “President Trump calls Fed Chair Jerome Powell ‘incompetent’ or”. YouTube. Retrieved January 13, 2026.
3(2026-01-13). “Central bank chiefs voice ‘full solidarity’ with US Fed, Powell”. Yahoo Finance. Retrieved January 13, 2026.
4(2026-01-13). “Trump attacks Powell again amid Fed independence fears”. LinkedIn/CNBC. Retrieved January 13, 2026.
5(2026-01-13). “Global central bank leaders rally behind Fed Chair Jerome Powell”. WION News. Retrieved January 13, 2026.
6(2026-01-13). “Trump attacks Powell again amid Fed independence fears”. Reddit. Retrieved January 13, 2026.
7(2026-01-12). “Gold Steadies After Surging on Worries Over Fed Independence”. Bloomberg. Retrieved January 13, 2026.
8(2026-01-12). “Trump’s legal attack on Powell underscores his aim for full control”. ABC30. Retrieved January 13, 2026.
9(2026-01-13). “WSJ’s Greg Ip: Powell criminal probe isn’t the last attempt by Trump”. CNBC. Retrieved January 13, 2026.