A shockwave has hit the U.S. political arena! The Republican Party accuses Powell of $2.5 billion 'perjury,' and Trump may replace the Federal Reserve Chairman early?

According to a report by Fox News, U.S. Republican Representative Anna Paulina Luna submitted a report to the Department of Justice on July 21, bringing criminal charges against Federal Reserve (FED) Chairman Powell, alleging that Powell made "false statements" regarding the Federal Reserve headquarters renovation during a congressional hearing. If these charges are established, it could not only shake Powell's position but also bring the long-standing issue of the Federal Reserve's independence to the forefront of political debate. Against the backdrop of the long-standing opposition between the Trump administration and the Federal Reserve, this incident undoubtedly adds significant uncertainty to the outlook for U.S. monetary policy.

Perjury Controversy: $2.5 Billion Renovation Case Surfaces

The focus of the case is on the renovation project of the Eklers Building in Washington D.C. Official documents show that the construction budget has ballooned from the initial $1.9 billion to $2.5 billion. Luna pointed out that investigators found documents mentioning facilities such as "VIP restaurant, marble decorations, rooftop garden", which contradicts Powell's statement during the hearing that there was "no luxurious design". She questioned Powell's denial that the building underwent a complete renovation from 1999 to 2003, but the data obtained by Congress indicates that a major renovation did indeed take place during that time.

However, at present, Powell has publicly denied all allegations of false statements and requested the Office of the Inspector General to intervene in the review. He emphasized that the cost increase is a "normal change" and that there was no intention to downplay the funding. However, the raising of this allegation has already brought the issue of the Federal Reserve's financial transparency back to the forefront.

Political Tension: Trump's Long-term Opposition with The Federal Reserve (FED)

Legal experts point out that the reason this single administrative event is so intense is closely related to the tense relationship between the Trump administration and The Federal Reserve (FED). Trump has publicly pressured multiple times this year for the FED to cut interest rates to stimulate economic growth, or else he would push for Powell to be removed.

However, U.S. law stipulates that the president must provide "just cause" to remove the chair of The Federal Reserve (FED), and policy disagreements do not constitute grounds for removal. Therefore, the "luxury" label of the revision has become a convenient material to attack Powell. If Powell is found to have perjured himself, it could provide Trump with a legal avenue to dismiss Powell.

However, some Republican senators remain hesitant about actually using the impeachment power because they are concerned that it will undermine the independence of the monetary policy institution. Once Powell is forced to step down, the market will react to the policy direction and political pressures of the next chairman, making fluctuations in interest rates, the dollar, and the bond market inevitable. This political struggle not only tests Trump's political skills but also affects the nerves of the global financial market.

System and Trust: The Rise of Congressional Oversight

The renovation case has also reignited Congress's old fire regarding the financial transparency of The Federal Reserve (FED). In recent years, multiple proposals have called for a comprehensive audit of The Federal Reserve (FED), but there has always been a lack of final push. Now, the "perjury gate" may become an accelerating hammer sound, and lawmakers are concerned not just about the 2.5 billion dollar fund, but how public funds are audited and explained. If audit obligations are increased, The Federal Reserve (FED) will face more frequent hearings and document disclosures in the future when formulating balance sheets or interest rate strategies.

For administrative agencies, trust is the scarcest currency. Powell chose to turn the issue over to the inspector general, hoping to resolve the dispute through external review, but this also gives Congress more say. Next, the House of Representatives may hold additional hearings and even summon contractors and design teams to clarify the exact reasons for the budget overruns. This controversy will undoubtedly strengthen Congress's oversight of The Federal Reserve (FED) and may have far-reaching implications for its future operations.

Market Outlook: Interest Rate Path and Global Capital Flow

Renovation and decoration controversies are currently still a political drama, but the financial market has begun to calculate end risks. Investors may want to pay attention to two main lines: whether the Department of Justice will conduct a formal investigation, and whether Trump will use this as a reason to replace the chairman. Once the investigation is initiated, public statements related to Powell may be scrutinized more closely, and the market's expectations for interest rate prospects will also expand accordingly.

For foreign exchange and bond traders, the reputation and decision consistency of the Federal Reserve (FED) directly affect their cost of capital. If investigations are time-consuming and results uncertain, the dollar may exhibit range-bound fluctuations, while U.S. bond yields are easily influenced by risk aversion sentiment. In other words, a dispute stemming from budget revisions has now connected to a greater test of the authority of the U.S. central bank, even reshuffling global capital between risk and reward.

Conclusion:

The Republican Party's "perjury" accusation against Federal Reserve Chairman Powell is not only an extension of domestic political struggles in the United States but may also have ripple effects on global financial markets. Against the backdrop of the long-standing confrontation between the Trump administration and the Federal Reserve, the development of this incident will closely affect the independence of the Federal Reserve, the direction of monetary policy, and the flow of global funds. Investors should closely monitor the situation's developments and cautiously assess potential risks to respond to possible market fluctuations.