Core Viewpoint - The article discusses the political pressures faced by the Federal Reserve, particularly in light of a criminal investigation into Chairman Jerome Powell regarding the renovation project and its budget overruns, suggesting a broader strategy by the White House to influence monetary policy through indirect means [3][7][62]. Group 1: Federal Reserve's Political Pressure - The Federal Reserve's renovation project has come under scrutiny, with budget overruns leading to a criminal investigation into Powell's testimony before Congress [3][4]. - Powell's response to the investigation indicates a significant shift in the political landscape, suggesting that the real issue is the pressure on the Fed to adjust interest rates according to political preferences [4][5][6]. - The market's immediate reaction to the news was to seek safety, with the dollar weakening and gold prices rising, indicating investor concern over the implications of political interference in monetary policy [6][7]. Group 2: White House Strategy - The White House appears to be shifting its strategy from directly influencing the federal funds rate to using alternative methods to manage economic perceptions, such as shadow quantitative easing and credit card interest rate caps [7][32][36]. - The upcoming 2026 midterm elections are a driving factor behind the urgency to improve voter perceptions of economic conditions, focusing on affordability rather than macroeconomic policy [8][13][14]. - The administration's approach includes a $200 billion shadow QE to lower mortgage costs and a proposed 10% cap on credit card interest rates, which directly addresses voter concerns about monthly payments [32][36][38]. Group 3: Implications for Monetary Policy - The article suggests that the current political climate may lead to a functional takeover of monetary policy, where the White House can influence interest rates without changing the official policy rate [42][49]. - This shift could result in a long-term increase in risk premiums as the market begins to factor in political uncertainty into pricing, potentially leading to higher volatility and costs in the future [52][61]. - Powell's strong stance against political threats highlights the critical juncture for central bank independence, indicating that the current situation is not just about individual accountability but about the broader implications for the monetary system [55][62].