President Donald Trump has repeatedly attacked the independence of the Federal Reserve. Friday’s dropping of a Justice Department probe into Federal Reserve Chair Jerome Powell doesn’t fully resolve the threat, though it will clear a path to the confirmation of Trump’s nominee for chair, Kevin Warsh.
“I think we would be foolish to conclude from this that the Fed is out of the woods,” said Lev Menand, a professor at Columbia Law School.
Warsh has long pledged to keep the Fed independent, including at his nomination hearing Tuesday. But it remains to be seen how he can hold up against a president who has said lowering interest rates was a litmus test for his nominee. Trump isn’t shy about telling normally independent parts of the federal government what to do. The Fed is one of the few holdouts that remain largely outside his control.
U.S. Attorney Jeanine Pirro on Friday said she would drop her investigation into cost overruns at Fed renovation projects and Powell’s testimony about them. Sen. Thom Tillis, R-N.C., has refused to allow Warsh’s nomination to proceed to a full Senate vote while the investigation is pending, because he sees it as a threat to the Fed’s ability to decide interest rates free of political considerations.
