Janet Yellen Speaks Out: Political Probe Into Powell Jeopardizes Federal Reserve Independence

PensionDestroyer · 2026-01-21T17:09:55+00:00

Janet Yellen warns that the investigation into Jerome Powell undermines the Federal Reserve's independence, urging markets to recognize its severity. She defends Powell against perjury allegations, viewing the probe as politically motivated and detrimental to market confidence.

PensionDestroyer

2026-01-21 17:09:55

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Former Federal Reserve Chair Janet Yellen has issued a stark warning about the ongoing investigation into current Fed Chair Jerome Powell, arguing it fundamentally undermines the institution’s independence. Speaking with media outlets on January 12th, Yellen expressed concern that financial markets have not adequately grasped the severity of the situation, describing it as “extremely chilling” for the central bank’s operational autonomy.

The Independence Question: Yellen’s Core Concern

Janet Yellen emphasized that the Fed’s ability to make monetary policy decisions free from political interference is paramount to economic stability. The probe into Powell, she argues, represents a troubling precedent that could compromise this foundational principle. Yellen warned that markets should be paying far closer attention to this institutional threat, noting that the limited market reaction has been somewhat surprising given the stakes involved.

Defending Powell Against Perjury Allegations

When addressing suggestions that Powell may have committed perjury in testimony last year, Yellen was unequivocal in her defense. Drawing on her extensive professional relationship with the current Fed Chair, she stated the possibility of such misconduct is virtually nonexistent. Yellen’s strong rebuttal suggests she views the allegations as politically motivated rather than substantively grounded, reflecting her perspective that Powell’s removal is the true objective behind the inquiry.

The Broader Implications for Market Confidence

Janet Yellen’s intervention signals growing concern among Fed leadership about the politicization of the institution. Her call for heightened market vigilance underscores the potential consequences: if the Fed’s independence erodes, markets could face increased uncertainty regarding future monetary policy decisions. This institutional erosion, in Yellen’s view, represents a more pressing concern than the specific allegations against Powell himself.

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