Economist Justin Wolfers has issued a stark warning regarding the escalating conflict between the White House and the Federal Reserve, declaring that Chair Jerome Powell is “going to war” to protect the central bank’s independence against what he terms the “Department of Recriminations.”
A Declaration Of War
In a series of blistering statements on Monday, Wolfers characterized Federal Reserve Chair Powell's recent public address as a direct counter-offensive against executive pressure.
Referring to an unprecedented “evening video” released by the central bank, Wolfers argued that Powell is no longer just defending policy, but actively fighting back.
“Don’t doubt that Jay Powell is going to war,” Wolfers stated. “I’ve never seen a central bank release an evening video so directly taking on a head of state. In this case, the medium is the message: Powell is taking his case to the people.”
Attempting to criminalize the actions of an independent public servant, Fed Chair Jay Powell, for the sin of acting independently—in the public interest rather than the President's political interest—is an outrage. It's bad economics, bad politics, bad for the rule of law, bad…
Wolfers leveled his harshest criticism at the administration’s apparent move to “criminalize” the actions of the Fed Chair.
He condemned the Justice Department's involvement, rebranding it the “Department of Recriminations,” and warned that succumbing to political pressure would turn the Federal Reserve into the “Federal Subserve.”
“Attempting to criminalize the actions of an independent public servant… for the sin of acting independently… is an outrage,” Wolfers wrote.
He described the move as a catastrophic failure on multiple fronts: “It’s bad economics, bad politics, bad for the rule of law, bad for the public sector, bad for American credibility and bad for Americans.”
A Call For Congressional Action
Beyond the immediate conflict, Wolfers framed the dispute as a constitutional crisis regarding monetary authority.
He asserted that the power to manage the nation's money supply lies with Congress, not the President, and urged legislators to intervene.
“Congress didn’t give Trump the power to run monetary policy,” Wolfers concluded, “and it’s up to Congress to ensure that he doesn’t just steal it.”
No Rate Cuts In January
The CME Group’s FedWatch tool‘s projections show markets pricing a 95% likelihood of the Federal Reserve leaving the current interest rates unchanged in January.
The SPDR S&P 500 ETF Trust(NYSE:SPY) and Invesco QQQ Trust ETF(NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Friday. The SPY was up 0.66% at $694.07, while the QQQ advanced 1.00% to $626.70, according to Benzinga Pro data.
The futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading lower on Monday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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