Former officials say DOJ probe threatens Fed independence, has 'no place in the United States'

Core Viewpoint - A group of former Federal Reserve chairs, Treasury secretaries, and prominent economists expressed support for Fed Chair Jerome Powell, alarmed by the Justice Department's threat of criminal prosecution against the central bank, which they view as an unprecedented attack on its independence [1][2]. Group 1: Concerns Over Central Bank Independence - The criminal inquiry into Fed Chair Jay Powell is seen as an attempt to undermine the Federal Reserve's independence, which is crucial for effective monetary policy [2]. - Janet Yellen emphasized that the investigation compromises the central bank's independence and described the situation as "extremely chilling" for financial markets [3]. - Concerns about the erosion of central bank independence could lead to higher bond yields, increasing borrowing costs for consumers, particularly affecting mortgage rates [4][5]. Group 2: Market Reactions and Predictions - Following the news of the investigation, markets showed volatility, with stocks wavering and slight declines in the dollar, Treasurys, and US equities futures [3]. - Predictions suggest that the criminal investigation may unify the Federal Reserve around Powell, potentially isolating any new nominee for Fed chair and complicating future monetary policy [7][8].