President Donald Trump has repeatedly slammed Federal Reserve chair Jerome Powell over his modest rate cuts, pushing for steeper cuts than some economists say is economically viable. Following the launch of a Department of Justice investigation into Powell, one top economist said the Fed’s mandate won’t change just because Powell is under even more scrutiny.
“It’s a little hard to know what exactly the motivations are behind this, but my expectation is that it’s not going to have an impact on policy,” Goldman Sachs chief economist Jan Hatzius said in an interview with CNBC’s “Squawk Box Europe” on Monday. “My expectation is that decisions are going to be made based on employment and inflation.”
Goldman Sachs has pushed back its forecast for the Fed to lower rates in March and June 2026, and now expects two 25-basis-point cuts in June and September of this year.
On Sunday night, Powell confirmed in a statement he was under investigation by the DOJ related to a testimony he gave over the renovation of Fed buildings. The probe on Powell, whose term as chair is up in May, has stoked fears of an attack on Fed independence.
For months, Trump, who appointed Powell in his first term, has built up a case to remove the Fed chair from his position. In July, the president said he was “surprised” Powell was appointed chair. Trump accused Powell of mismanaging funds to renovate the Fed buildings, which cost roughly $700 million more than the $2.5 billion initially allocated for. Last month, Trump threatened to sue Powell for “gross incompetence,” but did not cite specific claims.
