High-profile figures issue statements after Fed chair announced he and the central bank were under investigation
Market participants have already been recalibrating their expectations for United States interest rates. The prospect of a criminal investigation into Federal Reserve chair Jerome Powell adds a new, political risk to the mix, raising questions about how far the Trump administration might go in trying to shape monetary policy.
At Goldman Sachs’ global strategy conference in London, chief economist Jan Hatzius said the threat to indict Powell over testimony about a building renovation project has deepened existing unease over the Fed’s autonomy.
He described the case, which Powell has called a “pretext” to gain more influence over interest rates, as a test of the central bank’s ability to operate at arm’s length from the White House.
Meanwhile, prominent economists including Alan Greenspan, Ben Bernanke, and Janet Yellen hit out at the Trump administration's investigation of Powell, with Yellen describing the move as "chilling" and one that could threaten the central bank's independence.
Independence fears meet data‑first message
“Obviously there are more concerns that Fed independence was going to be under the gun, with the latest news on the criminal investigation into Chair Powell really having reinforced those concerns,” Hatzius said.
Even so, he stressed that he expects policy to remain driven by the outlook, not politics. “I have no doubt that he, 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,” Hatzius said.
Goldman pushed back its forecast for the first Fed cuts of this cycle and projected two 25‑basis‑point moves in June and September 2026 rather than March and June.
Hatzius said the risks around that profile are skewed to a slower easing path, given still‑resilient growth and only gradually cooling labour conditions.Mortgage market watches Fed path, not just headlines
Mortgage and housing professionals typically focus less on the politics of Fed independence than on how any shift in policy filters through to bond yields and, in turn, mortgage rates.
Bankrate data showed 30‑year US mortgage rates remained around the high‑6 to low‑7 percent range for much of 2025, even after several Fed cuts.
Weaker‑than‑expected labour data kept pressure on the Fed to ease, with mortgage investors responding by nudging yields lower and creating windows of relief in rates.
First American senior economist Sam Williamson said he expected “one, perhaps two” Fed cuts in 2026, contingent on incoming employment and inflation figures, underscoring how data‑dependence shaped both policy and pricing.
For lenders and originators, the episode around Powell’s investigation serves as another reminder that politics could jolt sentiment, but actual funding costs and mortgage coupons still move with the data and the Fed’s reaction to it.
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