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Financial markets have taken fright amid a resumption of the row over US central bank independence between its chair and the Trump administration.
It emerged overnight that the White House was threatening to indict Jerome Powell over comments he made to Congress in relation to renovation cost over-runs at the Federal Reserve buildings in Washington DC.
Mr Powell, who has been locked in a feud with Mr Trump over the pace of interest rate cuts since his second term as president began, responded by describing the action as a “pretext” to gain more influence over US monetary policy.
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He revealed the threats of criminal charges on Sunday night and described them as a consequence of not following the “preferences of the president”.
The dollar fell widely, and was down a quarter of a cent against the pound, while futures indicated that US stock markets would open sharply lower as investors pondered the implications. The price of safe haven gold also hit a new record high.
Mr Powell is due to stand down at the end of his second term in May and be replaced by a successor nominated by Mr Trump.
However, a Republican on the Senate banking committee that vets nominees, suggested strong opposition to any Department of Justice (DoJ) investigation into Mr Powell, declaring there would be no progress on selecting a new Fed chair until the conclusion of any legal proceedings.
Mr Powell said he had been served a subpoena relating to his testimony before the committee in June where he spoke about the Fed’s $2.5bn (£1.86bn) renovation of two office buildings – a project that Trump criticised as excessive just weeks ago.
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