According to sources familiar with the matter cited by The New York Times, the US attorney's office for the District of Columbia has opened a criminal investigation into the Federal Reserve chair over the renovation of the Fed's headquarters and possible perjury by Jerome Powell during his testimony before Congress last June.

Yesterday, Jerome Powell himself said that the Federal Reserve received subpoenas from the Justice Department on Friday to testify before a grand jury, a step that could precede potential indictments.

In a rare video posted on the Fed's website, Mr. Powell denounced a "pretext” aimed at intensifying pressure on the Fed to comply with the US president's demands.

Since returning to the White House, Donald Trump has been pressuring the Fed to cut interest rates. He began last spring by threatening to fire Jerome Powell, before accusing him of being responsible for cost overruns in the renovation of the Fed's head offices. Finally, he fired Lisa Cook in August over allegations of fraud involving mortgage loans. While a court temporarily allowed her to keep her job; the case is now before the Supreme Court.

Resignation as the goal

On Sunday evening, Donald Trump denied knowing about the steps taken by the Justice Department. "I don't know anything at all about it,” he told NBC News. "But (Powell) is not very good at the Fed, and he's not very good at building buildings.”

But his denials fool no one. The Justice Department, led by Pam Bondi, with Todd Blanche as her deputy-formerly Donald Trump's personal lawyer-takes its orders from the US president.

So why this new escalation? Because Jerome Powell's term as chair ends on May 15. And everyone is now waiting for Donald Trump to name his successor. All the more so because, with Stephen Miran's term expiring on January 31, Donald Trump will be able to place on the Fed's board the person who will succeed Jerome Powell in May.

However, Jerome Powell remains a Fed governor until January 2028. Historically, Fed chairs resign at the end of their term as chair, but Powell could indeed choose to stay on the board after May.

The Trump administration is therefore seeking to put maximum pressure on Jerome Powell to push him to resign. However, the challenge to the Fed's independence for nearly a year could actually prompt Jerome Powell to stay.

That's what yesterday's video suggests. "Whatever the odds of Powell staying in office, it feels like they just went up,” Renaissance Macro commented. Jerome Powell also enjoys the highest approval rating among Washington's leading political figures, according to a Gallup poll.

In any case, this new attack on the Fed does not appear to go down well with all Republican lawmakers. Senator Thom Tillis, a member of the Senate Banking Committee, said he would oppose any Fed nomination "until this legal matter is fully resolved.” Fed governors are nominated by the US president, but must then be confirmed by the Senate.

In markets, this renewed assault on the Fed's independence is once again pushing gold higher: this morning, an ounce of gold exceeded the $4,600 mark.