Trump Denies Offering Fed Chair Role to JPMorgan CEO Jamie Dimon

U.S. President Donald Trump has confirmed that he has no immediate plans to remove Federal Reserve Chair Jerome Powell, despite a criminal investigation into cost overruns tied to the Fed's headquarters renovation project. Trump stated in an interview with Reuters that the situation is still in a 'holding pattern,' and no final decision has been made.

The investigation, launched by the Justice Department, has raised questions about the Fed's independence and whether it could influence monetary policy decisions. The renovation project reportedly cost $2.5 billion, and the probe is examining whether there were financial mismanagement or improprieties.

Trump has previously criticized Powell for not lowering interest rates more aggressively and has openly questioned the Fed's independence. However, he reiterated that he has no plans to remove Powell from his current post. Powell's term as Fed chair is set to end in May 2026, after which he could remain on the Board of Governors until 2028.

Trump has hinted at potential successors to Powell, including former Fed Governor Kevin Warsh and National Economic Council Director Kevin Hassett. He ruled out Treasury Secretary Scott Bessent as a candidate for the position.

Why the Move Happened

The investigation into Powell stems from a $2.5 billion renovation of two historic buildings at the Federal Reserve's headquarters. Powell has denied any wrongdoing and has stated that the investigation is a political tactic to pressure the Fed into adopting more aggressive rate cuts.

The White House has defended the probe, arguing it is necessary to ensure accountability and transparency in the use of public funds. However, critics argue that the investigation could be a broader attempt to undermine the Fed's independence and influence monetary policy.

How Markets Reacted

Market participants and investors have reacted with concern to the ongoing investigation and the potential implications for monetary policy. Some analysts believe the probe could lead to increased inflation expectations and steeper yield curves as investors demand higher returns on long-term bonds.

JPMorgan Chase CEO Jamie Dimon has warned that any erosion of the Fed's independence could backfire and lead to higher interest rates. He emphasized that the Fed must remain independent to maintain confidence in its ability to manage the economy effectively.

What Analysts Are Watching

Financial analysts are closely monitoring the situation to assess the potential impact on markets and monetary policy. The Fed's ability to set interest rates based on economic conditions, rather than political pressure, is seen as crucial to maintaining economic stability.

The standoff between the Trump administration and the Federal Reserve highlights the ongoing debate over the appropriate role of the executive branch in shaping monetary policy. While the president has repeatedly criticized the Fed's actions, market participants are watching to see whether the administration will pursue further actions against the central bank.