Post Reports – Episode Summary
Title: Why Fed Chair Jerome Powell isn't backing down
Date: January 14, 2026
Host: Elahe Izadi
Guest: Andrew Ackerman, banking reporter, The Washington Post
Theme: The crisis between President Donald Trump and Federal Reserve Chair Jerome Powell, the politicization of the central bank, and what’s at stake for the economy and American institutions.
Episode Overview
This episode delves into the ongoing confrontation between President Donald Trump and Federal Reserve Chair Jerome “Jay” Powell, exploring how the relationship fractured, why Powell is facing a Department of Justice criminal investigation, and what the fallout might be for the Fed’s independence and the U.S. economy.
The episode features host Elahe Izadi and banking reporter Andrew Ackerman, who provide background, analysis, and insight into the unprecedented public clash, the implications of the DOJ inquiry, the history of Fed independence, and possible futures for America’s central banking leadership.
Key Discussion Points and Insights
1. Escalating Tensions: Trump vs. Powell
- Trump’s Public Attacks: Trump has openly insulted and threatened Powell over his handling of interest rates, even suggesting firing or demoting him—a break from recent presidential norms.
- Notable quote: “We have a stupid person. Frankly, at the Fed. He… does a terrible job. He’s costing us a lot of money.” – Donald Trump (00:21)
- Criminal Probe Announcement: DOJ launches a criminal probe targeting Powell, announced publicly in a Fed-released video where Powell directly addresses the charges and affirms his commitment to Fed independence.
- Notable quote: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.” – Jerome Powell (01:56)
2. Powell’s Uncharacteristic Response
- Stepping Out of Quiet: Powell, historically reserved, issues his strongest-ever public defense, decrying the investigation as an attack on the Fed's autonomy (02:33–03:00).
- Andrew Ackerman comments Powell appears like “an angry grandpa,” showing unusual forcefulness after years of restraint.
- Notable quote: “To see him go out swinging like that I think was very forceful.” – Andrew Ackerman (05:48)
- Powell’s Style: Noted as not an economist but a lawyer, he’s seen as pragmatic and an “everyman,” with a history of avoiding political engagement.
3. Fed 101 and Why Independence Matters
- Dual Mandate: The Fed is tasked by Congress with ensuring stable prices (inflation near 2%) and full employment (06:20).
- Independence Explained: Ackerman outlines the legal/traditional underpinnings of Fed independence; links presidential interference to negative market reactions and higher costs for everyday Americans (07:07).
- Historical cautionary tale: Nixon’s pressure on the Fed led to runaway inflation.
4. Investigation Details: Office Renovations as Pretext
- Origin Story: Investigation centered on cost overruns ($1.9b → $2.5b) in Fed office renovations, a project beset by pandemic-related price surges and construction challenges (09:28).
- Congressional Testimony: Powell faced aggressive questioning about the project, including Republican accusations he misled Congress—“Can you believe these costs? There’s gotta be some fraud here…” (11:16)
- Trump’s Publicized Visit: Trump’s site visit with Powell, televised in hard hats, is recounted as weirdly cordial given the context but ultimately used to apply pressure (11:44–12:35).
- Trump’s jest: “Well, I’d love him to lower interest rates.” (12:44)
5. The Broader Political Landscape
- Pressure Campaign History: Trump appointed Powell, but then regularly berated and threatened him when Powell declined to slash interest rates as aggressively as Trump demanded.
- Insight: Market fears of firing the Fed chair could spike US borrowing costs and inflation (15:07–16:12).
- Rate Policy Rationale: Ackerman explains the Fed was cautious, incrementally lowering rates to balance economic growth and contain inflation risks, not yielding to Trump’s wish for aggressive cuts (16:25–17:20).
- Powell metaphor: Managing trade/tariff uncertainty was like “driving in the fog”; the Fed slowed down rather than slashing rates blindly.
6. Immediate Fallout and Lawmaker Response
- Market Reaction: Initial “mini freak out” as markets feared for the Fed’s independence, but calmed by bipartisan statements defending Powell (21:47).
- Republican Backlash: Some Senate Republicans unexpectedly defend Powell and even pledge to block future Fed nominations until the investigation’s resolved (22:25–23:17).
- Example: Senator Thom Tillis (R-NC) threatens to hold up nominations due to concerns about politicized justice.
7. Fed Leadership Uncertainty
- Powell’s Successors: Likely replacements are “the Two Kevins”: Kevin Warship (former Fed governor) and Kevin Hassett (Trump’s longtime economic adviser) (23:37).
- Hassett has notably shifted positions to align with Trump’s, raising doubts about future independence (24:52).
- Concern: “Is this guy going to actually act independently or is he just going to do what Trump wants?” – Andrew Ackerman (25:02)
- Structural Safeguards: But Ackerman reminds listeners, the Fed Chair is one of many votes—the system was built to be resistant to sudden political swings (26:01).
8. Powell’s Future and Fed’s Institutional Resilience
- Will Powell Stay?: Unclear, but political pressure may motivate him to remain on the Fed board (though not as chair) to defend the institution’s independence and deny Trump another seat (27:02–27:59).
Notable Quotes & Memorable Moments
-
On Presidential Pressure:
“If the markets think that the Fed is going to be responsive to short term political pressures… they're going to expect inflation to be a little higher, and that means they're going to demand higher yields. So it makes everything more expensive, basically, for everyday people.”
— Andrew Ackerman (08:17) -
On the Investigation Motive:
“This is all a pretext and they're really just trying to undercut our independence. This isn't about office renovations. This is about Fed independence.”
— Andrew Ackerman, recapping Powell’s video (13:27) -
On the Future of the Fed:
“Whoever replaces Jay will face skepticism. Are they truly independent? That actually could make it harder for them to be accommodative to lower rates. Because if the market thinks you're not serious about tackling inflation and you lower rates… the market may demand a higher premium because they think inflation long-term is going to go up.”
— Andrew Ackerman (26:01)
Important Timestamps
- 00:21 – Trump insults Powell, voices desire to remove him
- 01:56 – Powell issues public video announcing DOJ probe, affirms Fed integrity
- 03:11–05:44 – Examples of Powell’s silence and resistance in the face of pressure; rare moments of forceful pushback on legality of presidential firing
- 06:20–08:26 – Primer on the Fed’s role and why its independence is critical
- 09:28–12:35 – The construction project probe; Trump’s visit to the Fed; context for the criminal investigation
- 15:07–17:20 – History of Trump-Powell relationship; rationale behind cautious monetary policy
- 21:47–23:17 – Economic, market, and Congressional response to the DOJ probe
- 23:37–25:46 – Fed leadership succession drama; doubts about future independence
- 26:01–27:59 – Institutional checks and Powell’s potential choices post-chairmanship
Final Thoughts
This episode provides a thorough, accessible look at a potentially seismic moment for American economic governance. Through lucid reporting and analysis, listeners gain insight into the stakes for personal finances, the future of central banking, and the health of U.S. institutions—all wrapped up in the volatile Trump–Powell standoff.