US Fed Chief Powell Signals DOJ Threat: What It Means for Market Stability and Investors in Oman
MUSCAT, JAN 13 — An economist based in Oman has cautioned that any perceived erosion of the US Federal Reserve’s independence could have widespread effects on the dollar, stock markets, and safe-haven assets. This warning follows Federal Reserve Chair Jerome Powell’s disclosure that the US Department of Justice has issued grand jury subpoenas to the Fed and threatened criminal charges related to his congressional testimony about a headquarters renovation project.
In a LinkedIn post, economist Azza al Habsi emphasized the significance of this issue for anyone earning, saving, or investing in US dollars or assets tied to the US. She noted that the focus has shifted from traditional concerns like inflation and employment to broader issues of institutional trust and the credibility of the US monetary system.
Powell, in a statement released by the Federal Reserve on Sunday, described the criminal charges threat as unrelated to the renovation project and dismissed them as “pretexts.” He stated that these actions stem from the Fed’s decision to set interest rates independently according to its mandate, rather than aligning with presidential preferences. Powell reaffirmed his commitment to serving with integrity and prioritizing the American people.
The White House has denied any involvement in the investigation, and former President Donald Trump has claimed he was unaware of the subpoenas, according to Reuters.
White House economic adviser Kevin Hassett also told CNBC that he was not part of Justice Department discussions regarding the probe. He expressed support for oversight of renovation expenses and said he would welcome such scrutiny if he were Fed chair. Reuters has reported that Hassett is among the potential candidates considered by Trump to replace Powell.
The markets responded sharply to the news. Gold prices surged to a record high near $4,600 an ounce, while the US dollar weakened as investors sought safe assets and reassessed political risks concerning the Fed’s independence, Reuters reported.
Powell’s term as Fed chair concludes on May 15, 2026. Trump recently stated he already knows whom he intends to nominate as Powell’s successor but has not revealed the individual’s identity.
Credit rating agency Fitch highlighted that the Federal Reserve’s independence is a critical factor supporting the United States’ AA+ sovereign rating, underscoring the broader implications if investor confidence in institutional checks and balances diminishes.
Al Habsi advised investors to closely monitor longer-dated US Treasury yields, suggesting that if political tensions continue, the bond market may become the most evident barrier to further escalation.
Special Analysis by Omanet | Navigate Oman’s Market
The recent threats to the independence of the US Federal Reserve introduce significant geopolitical and financial uncertainty that could ripple through global markets, including Oman’s investment landscape. Businesses and investors in Oman should monitor US dollar volatility and longer-dated US Treasury yields closely, as these will impact capital flows and risk appetites. Smart investors must consider diversifying portfolios and exploring safe-haven assets or regional alternatives to shield against potential shocks from weakening confidence in major global institutions.
