Trump move on Fed may have hit a tripwire with a rally behind Powell

The Justice Department opened a criminal inquiry into Fed Chair Jerome Powell’s comments about building renovations, and former Fed chairs and some Republican lawmakers publicly defended Powell and central bank independence.

Federal Reserve Chair Jerome Powell said the Justice Department has opened a criminal inquiry into comments he made to Congress about renovations at the Fed’s headquarters. The disclosure quickly drew public statements from former Fed chairs and other former economic officials defending the institution. Some Republican lawmakers were reported as breaking with the president to support Powell. The episode has focused attention on the role of central bank independence in economic policy. Key developments: - Powell disclosed a Department of Justice criminal inquiry into his comments to the Senate Banking Committee about Fed headquarters renovations. - Former Fed chairs Janet Yellen, Ben Bernanke and Alan Greenspan, joined by other former economic officials, issued a joint statement criticizing the probe and defending central bank independence. - Republican lawmakers and market reactions were reported as rallying to Powell's side after the disclosure. Summary: The inquiry prompted cross-party defenses of the Fed and attracted international attention to concerns about political pressure on monetary policy. Undetermined at this time.