US prosecutors launch criminal investigation into Federal Reserve chair

Summary

Goldman Sachs: Powell investigation has 'reinforced' concerns about Fed independenceGoldman Sachs’ chief economist Jan Hatzius has warned this morning that the criminal indictment threat facing Federal Reserve chairman Jerome Powell has reinforced worries that central bank independence is being undermined.Reuters reports that Hatzius told a 2026 Goldman Sachs Global Strategy Conference: “Obviously there are more concerns that Fed independence is going to be under the gun, with the latest news on the criminal investigation into Chair Powell really having reinforced those concerns.” Hatzius added, though, that he expected the Fed to continue to make decisions based on data: “I have no doubt that he (Powell) in his remaining term as chair is going to make decisions based on the economic data and not be influenced one way or the other, cutting more or refusing to cut on the back of data that could push in that direction.” ShareUpdated at 11.36 CETKey eventsShow key events onlyPlease turn on JavaScript to use this featureOne intriguing question about the future of the Federal Reserve is whether Jerome Powell remains on its board after stepping down as chair, or departs.If he did leave, that would create a vacancy which Donald Trump could use to appoint his favoured successor onto the board, and then into the chair’s seat.Atakan Bakiskan, US economist at Berenberg, explains: Although Powell’s term as Fed Chair ends in May, he can remain on the Board as a Governor until January 2028. That said, most chairs in the past have left the Fed once their chair tenure expired. If Powell resigns from his Governor position in June, the resulting vacancy would allow President Trump to make a new appointment. If he does not resign, someone else on the Board would need to step down for an outsider -- such as Kevin Warsh or Kevin Hassett -- to become Fed Chair. That person could be Governor Stephen Miran. Unless Trump re-nominates him and the Senate confirms, he would have to step down f...