Yellen Raises Critical Concerns Over Fed Independence as Powell Investigation Escalates

In a significant statement made in mid-January, former Federal Reserve Chair Janet Yellen voiced serious objections to the ongoing investigation targeting Jerome Powell, arguing that such political scrutiny poses a fundamental threat to the central bank’s autonomy. Her warning represents a rare public intervention from a former Fed leader on sensitive institutional matters—one that deserves careful attention from policymakers and market participants alike.

The Independence Question: Why This Matters More Than Headlines Suggest

Yellen emphasized that the investigation into Powell undermines the Fed’s hard-won institutional independence, a principle that has underpinned stable monetary policy for decades. The central bank’s autonomy from political pressure has long been viewed as essential to credible economic decision-making. When asked about market reaction, Yellen expressed dismay that financial participants haven’t demonstrated greater alarm. “The market should be more concerned,” she noted, highlighting what she perceives as a gap between the severity of the situation and public response.

A Former Chair Defends Her Successor

Remarkably, Yellen also addressed the perjury allegations that have surfaced against Powell. Drawing on her personal knowledge of the current Fed chair, she dismissed such suggestions outright. “I know Powell very well, and the likelihood of him committing perjury is essentially zero,” Yellen stated firmly. This personal endorsement from a respected predecessor carries weight in policy circles. She further suggested that the real motivations behind the investigation may extend beyond any factual allegations, commenting that those driving the inquiry “want him removed from office.”

What’s Really at Stake

Beyond the immediate political dispute, Yellen’s intervention underscores a broader concern: the precedent being set. When institutional independence becomes subject to investigation and partisan pressure, it chips away at the credibility that markets and the public place in central banking institutions. Her characterization of the situation as “deeply concerning” reflects genuine worry about structural threats to how the Fed operates—not merely personal support for Powell.

Financial markets and observers should heed Yellen’s alarm. Her perspective, informed by years at the helm of the Federal Reserve, offers valuable insight into why this moment warrants heightened vigilance regarding the Fed’s institutional health.