JPMorgan Chase chief Jamie Dimon has warned that the Trump administration’s attacks on Federal Reserve Chair Jerome Powell could backfire by driving up borrowing costs and causing inflation to spike.
Dimon, who oversees the largest U.S. bank by assets, said during a call discussing JPMorgan’s fourth-quarter results that he had “enormous respect” for Powell and was a strong supporter of the Fed’s independence.
“Anything that chips away at that is probably not a great idea,” he said, according to the Financial Times. “And in my view, it will have the reverse consequences. It will raise inflation expectations and probably increase rates over time.”
Powell, 72, announced Sunday that Trump’s Justice Department had launched a criminal investigation against him, which he blamed on the Fed’s failure to do Trump’s bidding.
“This unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” he said. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”
The administration has prosecuted other officials whom Trump considers his enemies, including former FBI Director James Comey and New York Attorney General Letitia James.
The president has insisted he didn’t know anything about the investigation, which revolves around Powell’s congressional testimony last June regarding renovations to the Fed’s offices in Washington, D.C.
But Trump has repeatedly railed against Powell for being “clueless” and an “enemy,” after the Fed failed to follow his demands to lower interest rates.
Sources told The Wall Street Journal that Trump’s federal housing chair, Bill Pulte, kick-started the investigation by preparing a report about the Fed’s renovations and passing it along to the U.S. Attorney for Washington, D.C., former Fox News personality Jeanine Pirro.
Attorney General Pam Bondi would have also signed off on the subpoena, the Journal noted.
Even Republican lawmakers quickly jumped to Powell’s defense, with Sen. Thom Tillis of North Carolina vowing to block Trump’s future Fed nominees, and Alaska Sen. Lisa Murkowski threatening to investigate the Justice Department if it moves forward with the inquiry.
Following the backlash, Pirro tried to downplay the investigation.
“The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s. None of this would have happened if they had just responded to our outreach,” she wrote in a statement on social media. “This office makes decisions based on the merits, nothing more and nothing less.”
The Daily Beast has reached out to the White House for comment.
