Jamie Dimon slams DOJ probe of Jerome Powell, warning investigation could stoke inflation

• The Fed headquarters renovation, initially budgeted at $1.9 billion, has run $700 million over budget and is being subsidized by taxpayers since the Fed has been unprofitable since 2022
• Dimon warned that 'anything that chips away' at central bank independence 'will raise inflation expectations and probably increase rates over time'
• A group of 12 global central bankers, including ECB President Christine Lagarde, issued an extraordinary joint statement expressing 'full solidarity' with Powell, a coordinated action typically reserved for major crises

Summary

JPMorgan Chase CEO Jamie Dimon has strongly criticized the Department of Justice's investigation into Federal Reserve Chair Jerome Powell, warning that undermining central bank independence could increase inflation and interest rates. The probe centers on a $2.5 billion headquarters renovation project—$700 million over its initial budget—that critics have dubbed the "Palace of Versailles."

Key Figures:

• Jamie Dimon (JPMorgan Chase CEO) and Robin Vince (Bank of New York CEO) publicly defended Powell during earnings calls
• Jerome Powell, 72, Fed Chair whose term ends in May
• Project costs: Originally approved at $1.9 billion in 2021, now $2.5 billion

Main Points:

Dimon argued during JPMorgan's Q4 earnings call that threats to Fed independence would have "reverse consequences," raising inflation expectations and rates. Vince called the investigation "counterproductive" to affordability goals. A group of 12 global central bankers, including ECB President Christine Lagarde, issued a rare joint statement supporting Powell and defending central bank independence.

Market Context:

The Fed has posted $243 billion in losses since 2022, halting profit transfers to the U.S. Treasury and effectively increasing the national deficit. A 2023 St. Louis Fed study projected profitability wouldn't return until mid-2027, though recent data suggests improvement.

Political Implications:

Powell accused the DOJ of using the renovation probe to pressure the Fed into cutting rates. The coordinated response from global central bankers—typically reserved for major crises like 2008 or COVID-19—underscores serious concerns about monetary policy independence and potential long-term impacts on bond markets and economic stability.