The US Department of Justice opened a criminal investigation against Jerome Powell, chair of the Federal Reserve, raising fears over the central bank's independence and shaking global markets. The dollar fell to lows as gold hit a new all-time high. In Chile, the Ipsa reached a record driven by copper.
The criminal investigation launched by the US Department of Justice against the Federal Reserve (Fed) focuses on Jerome Powell's testimony before the Senate Banking Committee last June, related to a US$2.5 billion renovation project for the Fed's historic office buildings in Washington. Powell, in a video posted Sunday on the Fed's official X account, stated that the probe arises because the central bank set interest rates 'based on our best assessment of what will serve the public, rather than following' Donald Trump's preferences. 'This is about whether the Fed can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will be directed by political pressure or intimidation,' warned Powell, who was notified Friday of grand jury subpoenas threatening a criminal charge.
Powell insisted the inquiry has no direct relation to his testimony or the renovation project, calling them 'pretexts.' Three former Fed chairs—Janet Yellen, Ben Bernanke, and Alan Greenspan—issued a joint statement criticizing the action as an 'unprecedented attempt to use fiscal attacks to undermine the independence' of the institution. 'The independence of the Federal Reserve and the public perception of that independence are crucial to economic performance, including achieving the objectives Congress has set: stable prices, maximum employment, and moderate long-term interest rates,' they stated, comparing it to practices in 'emerging markets with weak institutions.'
Markets reacted with initial volatility but closed higher. In the US, the S&P 500 rose 0.15%, Nasdaq 0.26%, and Dow Jones 0.17%, despite pressures on the banking sector from Trump's proposal to cap credit card rates at 10%. The dollar index fell 0.21% to 98.680 points, and in Chile the dollar traded at $888.10, its lowest in two years, with the peso advancing 1.78% in 2026. Gold reached US$4,605, up 2.3%. On the Santiago Stock Exchange, the Ipsa climbed 1.125% to 11,066.16 points, a new all-time high, driven by SQM (+3.90%) and copper, which surged to US$6.04 per pound. The Fed has cut rates in the last three meetings to between 3.5% and 3.75%, the lowest in three years, but not at the pace desired by Trump. Analysts like Ignacio Mieres of XTB Latam see a favorable scenario for Chile, supported by copper's recovery, while the Central Bank's Economic Expectations Survey improved the GDP growth forecast by two tenths.
