RATES STAY DATA-LED, NOT WHITE HOUSE-FED
Is US monetary policy facing political intimidation for the first time in years? The US dollar fell heavily on Friday after Federal Reserve Chair Jerome Powell stated that a Department of Justice (DOJ) investigation threatens the independence of the US central bank.
As investors began to worry about political pressure on monetary policy, markets responded swiftly.
Powell said the DOJ had served the Federal Reserve with grand jury charges in a video message issued on January 11. His June testimony to Congress regarding the renovation of the Fed’s historic headquarters is connected to the investigation.
Powell said the lawsuit is being used as a pretext to put pressure on the Fed over interest rate decisions and strongly denied any illegal activity.
Powell indicated that the probe is the result of the Fed’s refusal to set interest rates based on political preferences, including pressure from President Donald Trump to lower rates.
He warned that the Fed’s capacity to make choices based on employment realities, inflation patterns, and economic statistics could be harmed by such actions.
According to Bloomberg, the US dollar dropped against all major currencies after the announcement. Early indications of risk aversion in international markets were seen in the 0.3% decline in S&P 500 futures.
Demand for Bitcoin (BTC), which is sometimes viewed as a hedge against monetary and political volatility, has increased, according to market analysts. According to market data, Bitcoin was trading close to $90,302, up 0.31% over the previous day.
With a market capitalisation of $1.8 trillion, Bitcoin’s 24-hour trading volume increased by 140% to $28.64 billion, indicating significant investor interest.
When trust in conventional banking institutions declines, analysts point out that Bitcoin’s fixed number of 21 million coins, of which 19.97 million are currently in circulation, makes it appealing.
Analysts said that growing activity indicates institutional and retail involvement and that “any perceived threat to Fed independence tends to support hard assets and decentralised stores of value like Bitcoin.”
Gold prices reached a new all-time high as investors shifted towards safe-haven assets.
Silver gained a lot as well. Market analysts predict that MCX silver prices in India would open higher, possibly reaching levels close to ₹2,60,000 per kg, while Comex silver surged to an all-time high of $83.88 per ounce.
Powell highlighted that he has worked under four US administrations while adopting a nonpartisan stance centred on the Fed’s twin mandate of maximum employment and price stability. His governorship lasts until January 2028, whereas his tenure as Fed Chair expires in May 2026.
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