The Trump administration's conflict with the US Federal Reserve, and especially its chairman Jerome Powell, is escalating. In a video post, Powell announced that the US Department of Justice is threatening the Federal Reserve with criminal charges. US prosecutors have opened a criminal investigation into a $2.5 billion renovation of the central bank's offices.
Powell himself says in the video that the main reason for the indictment is actually something else: that he did not want to do what Trump wanted - lower interest rates.
A stubborn mule
Trump has waged a war against the Fed chief during his presidency, calling him a “stubborn mule” because Powell has not been willing to lower interest rates as much as Trump wanted. He has also suggested that Powell built himself a “palace” in connection with the renovation.
Many politicians are reacting with dismay to the announcement, including Republicans such as Senator Thom Tillis.
The announcement has also caused some market reactions. Futures trading on Wall Street indicates a slight decline at the opening, but above all the US dollar is losing value. One dollar now costs 9.16 kronor, equal to the lowest level this year.
Gold is rising
Another clear trend is that the price of gold, an asset traditionally seen as a safe investment in troubled times, is now rising further.
From a market perspective, there is also talk of "Sell America," the news agency Bloomberg writes - meaning reducing exposure to the United States. Mattias Persson, chief economist at Swedbank, says this has been a clear trend for some time.
What has happened recently with Venezuela, Iran, and the increased threat to Greenland also means that investors are very cautious about buying US government securities at the moment, he says.
Reduced exposure to American assets, in turn, results in an even weaker US dollar, which can have major consequences, Mattias Persson points out.
The dollar is the anchor in the global financial system.
