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US President Donald Trump has escalated tensions with the Federal Reserve by again threatening to fire its chairman, Jerome Powell, and refusing to stop a criminal investigation into him.
In an interview with Fox Business, Trump said that if Powell does not leave at the end of his term on May 15, he will be forced to fire him.
Powell, on the other hand, has indicated that he may remain on the board beyond his term as chairman, especially if Trump's proposed successor, Kevin Warsh, is not confirmed in time. This situation has been further complicated by the fact that several Republican senators, led by Thom Tillis, have signaled that they will not vote to confirm Warsh until the investigation into Powell is concluded.
The criminal investigation is related to the management of a $2.5 billion renovation project at the central bank's headquarters in Washington. Trump has insisted that the investigation should continue to determine whether there was "incompetence, corruption, or both." However, critics see it as an attempt to exert political pressure on the central bank.
A federal judge, James Boasberg, has previously blocked some of the prosecutors' actions, arguing that the investigation could be used as a tool to force Powell to comply with the president's demands for interest rate cuts. Federal Reserve lawyers have also objected to the way the investigation is being conducted.
Meanwhile, former Fed Chair and Treasury Secretary Janet Yellen has warned that the development poses an unprecedented threat to the central bank's independence. She noted that it is rare for a president of a developed country to publicly seek influence over interest rates for fiscal purposes.
The situation has also caused concern in international markets and among central banks in other countries, which see the independence of the Federal Reserve as a key pillar of global financial stability.
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