Donald Trump has threatened Jerome Powell with a criminal investigation — but it hasn’t stopped the Federal Reserve chair holding firm on interest rates, in a move that’ll affect Bitcoin.
On Wednesday night, it was confirmed that the cost of borrowing will be left unchanged yet again, despite the president calling for drastic cuts.
In a statement, the US central bank said economic growth is expanding “at a solid pace,” but inflation remains at an elevated level.
As you might expect, there were two dissenting voices within the Federal Open Markets Committee. One of them was recent Trump appointee Stephen Miran. The other was Christopher Waller, who is currently on the shortlist to succeed Powell when his term expires in May.
During a news conference, Powell refused to comment on the criminal investigation, which is related to the testimony he made surrounding a multi-year upgrade to the Fed’s headquarters. But earlier this month, he claimed the threat of charges was because he had refused to follow the president’s whims when setting interest rates.
The escalating row has cast an unwelcome spotlight on whether the Federal Reserve’s independence is in jeopardy. Powell told reporters:
“The point of independence is not to protect policymakers, it just is that every advanced democracy in the world has come round to this common practice … Monetary policy can be used through an election cycle to affect the economy in a way that will be politically worthwhile … It’s a good practice, it’s pretty much everywhere among countries that look at all like the United States, and if you lose that, it will be hard to restore the credibility of the institution.”
Powell’s advice for the person who ends up taking his job was simple: “Stay out of elected politics.”
Trump had little to say about the Fed’s latest interest rate decision on Truth Social — however, he did share a link to a CNBC article that suggests the central bank is yet to comply with grand jury subpoenas related to that controversial criminal investigation.
Interest rate cuts could be necessary to give Bitcoin a shot in the arm. The world’s biggest cryptocurrency has repeatedly failed to meaningfully break through $90,000 in recent days — and fell in the hours following Powell’s announcement. Generally speaking, lower rates tend to attract investors to riskier assets as returns from savings accounts dwindle.
So far, 2026 has proven especially challenging for Bitcoin. While the S&P 500 has managed to vault beyond 7,000 points for the first time — with gold smashing through $5,000 per ounce and hitting record highs — the crypto markets appear to be stagnating.
As things stand, analysts now expect that further interest rate cuts before Powell’s term expires look unlikely — and are pencilling in reductions towards the back end of this year. (Incidentally, a recent study found that forecasts by the prediction market Kalshi are “roughly consistent” with those made on Wall Street.) At present, there’s seen to be less than a 30% chance of a reduction come March or May, rising to 65% by June.
Speculation about who Trump might nominate is mounting, with rumors that an announcement could be made as early as this week. Rick Rieder has overtaken Kevin Hassett as favorite for the role — a Wall Street veteran who currently serves as BlackRock’s chief investment officer for fixed income.
Rieder has publicly called for interest rates to be much lower than where they are currently. He argues that, instead of exacerbating inflation, it could actually cool prices down by making house prices more affordable. That being said, the executive isn’t regarded as someone who would dance to Trump’s tune — and he’s recently argued that the Fed’s independence is essential. He told CNBC:
“I think that anybody who is in that seat, that is an independent seat. You report to, I would argue, your constituents, which is the country … Whoever is in the role is going to make the decisions that are the right thing for maximum employment and price stability.”
Rieder has said that he believes a target rate of 3% amounts to “equilibrium” — and given we’re currently in a range of between 3.5% to 3.75%, that would indicate there is some room for maneuver.
For now though, interest rates — and Bitcoin’s price — remain in a holding pattern.
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