Is Powell Taking a Blow Below the Belt? Fresh Criminal Allegations Ignite Fed Firestorm

On Monday, July 21, 2025, global markets reeled as President Donald Trump, labeling Federal Reserve Chair Jerome Powell “a failure,” fueled a criminal referral by Congresswoman Anna Paulina Luna, accusing Powell of perjury over a $2.5 billion Fed renovation. The U.S. Dollar Index (DXY) fell 0.67% to 97.806 from 98.462, signaling investor unease. Backed by Office of Management and Budget Director Russell Vought, Trump’s push for rate cuts threatens Fed independence. Treasury Secretary Scott Bessent and Fed Governor Adriana Kugler call for calm, as policymakers strive to stabilize assets and avert economic chaos.

Luna’s Criminal Charges Shake the Fed

Congresswoman Anna Paulina Luna, a Florida Republican, accused Powell of lying under oath during a June 25, 2025, Senate testimony about the Fed’s Eccles Building renovation. Luna alleged Powell denied luxury features, such as a VIP dining room and private elevators, despite documents showing costs escalating from $1.9 billion to $2.5 billion. Supported by Russell Vought, Luna’s July 21 referral to the Justice Department, demanding criminal charges, triggered a 0.2% intraday DXY dip. Powell’s request for an Inspector General review defends transparency, but the accusations, amplified by Vought’s oversight demands, erode trust in the Fed’s governance.

Trump’s Escalating War on the Fed

President Trump, who appointed Powell in 2018, intensified his campaign, criticizing the Fed’s “sluggish” rate cut stance amid a $5 trillion debt ceiling hike. In a July 15 meeting with Republican lawmakers, Trump hinted at drafting Powell’s dismissal, only to call it “highly unlikely” without fraud evidence, constrained by a May 2025 Supreme Court ruling protecting Fed officials. Trump’s push for lower rates aims to ease a $3 trillion deficit increase by 2030, clashing with the Fed’s caution as June’s CPI rose to 2.7% from 2.4%, fueling political and market tensions.

Bessent and Kugler Defend Stability

Treasury Secretary Scott Bessent, visibly strained at a July 21 press conference, warned that ousting Powell could “shatter decades of Fed trust,” urging a structural review over personal attacks. Bessent highlighted an October 2025 successor selection process, noting rate cuts could unlock the mortgage market, aligning with Trump’s fiscal goals. Fed Governor Adriana Kugler, in a rare rebuke, cautioned that political meddling risks “inflationary chaos,” citing June’s 2.7% CPI spike. The Fed’s 54% September rate cut odds reflect caution amid Trump’s tariff-driven pressures.

Key Assets Encounter Political Firestorm

The DXY’s 0.67% drop to 97.806 (this value is not present in the provided snippets, so it remains unchanged from your original text), within a 97.700–98.508 range, lifted EUR/USD 0.55% to 1.16887 and GBP/USD 0.59% to 1.34870, while 10-year Treasury yields dipped to 4.364%, signaling safe-haven bond flows. A 50% U.S. copper tariff, pushing futures up 1.10% to 5.66548 USD, supports commodity assets, but Fed uncertainty pressures USD pairs. The People’s Bank of China’s $5 billion Yuan defense steadied CNY/USD at 0.1393. The DXY’s RSI, nearing oversold, suggests support at 97.200 and resistance at 98.508, with further declines possible if tensions persist.

Quelling the Economic Storm

The Trump-Luna-Vought offensive, countered by Bessent and Kugler’s urgent calls for stability, threatens a DXY slide to 97.200 by late July, risking EUR/USD and GBP/USD volatility. U.S. policymakers must shield Fed autonomy and clarify monetary policy to restore confidence. Investors should monitor June PCE data and tariff developments. Failure to resolve this criminal pursuit of Powell could unleash a global financial storm, undermining 2025’s fragile 6% equity gains. Decisive action is critical to stabilize markets and preserve economic resilience.