Donald Trump has been accused of turning the US into a “banana republic” after his justice department opened a criminal investigation into Federal Reserve chairman Jerome Powell.

Former Treasury Secretary Janet Yellen, who also served as Fed chair, said the US Department of Justice’s investigation into her successor was “extremely chilling” and suggested it was part of efforts by Mr Trump to push for lower interest rates.

She told CNBC: “You have a president that says the Fed should be cutting rates to lower rate payments on the federal debt… It is the road to a banana republic.”

Treasury Secretary Scott Bessent reportedly warned Mr Trump in a call on Sunday that the investigation “made a mess” and could be bad for financial markets, according to Axios.

In a statement on Sunday, Mr Powell said that the Fed had been served with grand jury subpoenas on Friday concerning his testimony to the Senate banking committee last June about the renovation of the central bank’s headquarters, a project that has run over budget. The Department of Justice is “threatening a criminal indictment related to my testimony,” he said.

President Donald Trump has attacked the Fed for the costly renovation and had previously suggested that the high costs were evidence of fraud and grounds to sack the central banker. Most observers believe the President is using the renovation as a pretext to pressure Mr Powell into lowering interest rates.

07:06pm

The independence of the Federal Reserve was thrown into question when the news broke that the US’s department of justice opened a criminal investigation into chairman Jerome Powell.

In response, gold and silver hit fresh records and a number of European stocks came close to reaching new highs.

The FTSE 100 also climbed almost 0.2pc at the close, led by gains in miners.

Despite falling at the opening bell, Wall Street has pared losses in the early afternoon.

06:17pm

European stocks ended the trading day close to new highs as investors worried about the independence of the Federal Reserve amid an investigation into its chair.

Germany’s Dax jumped almost 0.6pc at the close, hitting a fresh record of 25,405.34 and extending a 10-day rally.

The pan-European Stoxx 600 closed 0.2pc higher, with silver producer Fresnillo among its top risers after the white metal reached a new high earlier on Monday.

05:29pm

Wall Street has for the most part bounced back since falling at the opening bell after an investigation into the current chair of the Federal Reserve raised questions about the independence of the central bank.

The benchmark S&P 500 rose almost 0.1pc shortly after noon in New York while the tech-heavy Nasdaq Composite edged 0.3pc higher.

The Dow Jones Industrial Average remained little changed, falling nearly 0.2pc.

05:09pm

The FTSE 100 closed higher after mining companies continued to surge into the new trading week.

London’s main stocks index climbed 0.16pc at the closing bell while European and US stocks both remained mixed.

The top riser was silver producer Fresnillo, which soared 6.5 pc after the white metal jumped to a new record of $86 following the independence of the Federal Reserve being thrown into question amid a criminal investigation into its chair.

Endeavour Mining and Glencore also saw some of the biggest gains of the day, up about 4pc and 3.5pc, respectively.

04:41pm

A republican senator has vowed to block nominees by Donald Trump to the Federal Reserve after a criminal investigation was launched into Jerome Powell.

Thom Tillis of North Carolina, who is a member of the Senate Banking Committee, wrote in a post on X: “If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none.

“It is now the independence and credibility of the Department of Justice that are in question.

“I will oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved.”

04:27pm

Janet Yellen has warned the US will turn into a “banana republic” if Donald Trump keeps meddling with the Federal Reserve.

Ms Yellen, who was the first woman to chair the central bank, attacked the criminal investigation into current chair Jerome Powell, claiming it undermines the independence of the institution.

“You have a President that says the Fed should be cutting rates to lower rate payments on the federal debt. It is the road to banana republic,” she said, adding the attack was “extremely chilling”.

It comes after Mr Powell said the US Department of Justice had served the bank with grand jury subpoenas on Friday. It concerns his testimony to the Senate Banking Committee last June about renovations at the historic Fed headquarters.

“I’m surprised the market isn’t more concerned,” said Ms Yellen, who also served as secretary of the US Treasury, said. “It seems to me that the market should be concerned.

“Knowing Powell as well as I do, the odds that he would have lied are zero so I do believe they’re going after him because they want his seat and want him gone,” she added.

Mr Powell directly replaced Ms Yellen as chair in 2018 after she held the position for four years.

He was nominated to the post by Mr Trump and subsequently nominated for a second term by Joe Biden.

03:48pm

Alphabet, the owner of Google, has become the fourth company to reach a market capitalisation of $4trn (£2.97trn).

Shares in the tech giant rose about 1pc before paring back gains after Apple announced it would be using Google’s Gemini for the next generation of Siri.

Nvidia, Microsoft and Apple are the only three other companies to have passed the coveted threshold.

03:39pm

Several financial institutions have scaled back their expectations for rate cuts by the Federal Reserve after the central bank was hit with a criminal investigation.

JPMorgan is foreseeing that the next move by the central bank will be a 25-basis-point rate hike in 2027, reversing previous predictions that rates will be cut this year.

Analysts at the bank said: “If the labor market weakens again in the coming months, or if inflation falls materially, the Fed could still ease later this year.

“However, we expect the labor market to tighten by the second quarter and the disinflation process to be quite gradual.”

Meanwhile, Barclays has postponed its expectation of a rate cut by the Fed to mid-2026.

Ajay Rajadhyaksha wrote in a note on Monday: “As of Friday’s close, bonds were pricing in a 25% chance of a Fed rate cut in March.

“That probability has now fallen to 20% at the time of writing.

“Powell’s stance is not a surprise to investors; he made it clear across 2025 that he will legally fight measures to remove him. At the margin, one could almost argue that making the subpoenas public raises the chance that the Fed errs somewhat hawkish in an effort to re-assert its independence.”

Goldman Sachs, which had expected a 25-basis-point in the first half of the year, now does not foresee one until December.

03:10pm

Today’s gains in gold and silver are bringing back memories of presidential pressure on the Federal Reserve, according to AJ Bell.

Russ Mould of the British investment platform said: “In the 1960s, Lyndon B. Johnson leaned heavily on then Federal Reserve chair William McChesney (‘Bill’) Martin Jr.

“Bill Martin may perhaps be best known for being accredited with the comment that it is the Fed’s job to ‘remove the punch bowl’ before the economic and stock market party gets out of hand.

“But some economists and historians argue he was slow to raise interest rates in the mid-to-late 1960s as President Johnson tried to fund his ‘guns and butter’ policies, with the result that inflation ran hot and the US stock market enjoyed a boom, thanks in the main to so-called ‘onics and tronics’ go-go tech stocks, which ultimately proved unsustainable.

“Martin did ultimately tighten policy, rather than cut it, but he moved most decisively after spring 1968 and Johnson’s announcement that he would not stand in the US presidential election of that year.”

“Keen students of history will remember that gold was one of the very few assets which provided a positive total return during the inflation-ravaged 1970s, and that the dollar lost substantial amounts of ground – the DXY (‘Dixie’) index, which measures the greenback against a basket of currencies plunged from 120 to barely 95 during Burns’ tenure at the Fed and then kept on going all the way to barely 80 under his successor, William Miller, until the Volcker monetary medicine stopped the rot,” Mr Mould added.

02:42pm

US stocks have opened in the red as Trump’s latest assault on the Federal Reserve fuels independence fears.

The benchmark S&P 500 opened 0.3pc lower, while the Dow Jones and tech-heavy Nasdaq were both down 0.4pc.

02:36pm

Trump’s attack on the Federal Reserve’s independence poses a threat to the US stock market, JP Morgan has said.

Andrew Tyler, JP Morgan’s head of global market intelligence, said: “While macro and corporate fundamentals support a tactically bullish stance the risk to Fed independence creates an overhang and thus we are cautious in the very near-term.

“The risk around Fed independence is likely to push the US toward near-term underperformance.”

Wall Street is poised to fall when markets open this afternoon as spooked investors flock to the safe haven of gold.

02:23pm

Donald Trump’s legal attack on Jerome Powell further threatens to Fed’s independence and will make it harder for the next chairman to do their job, Scope Ratings has said.

The ratings agency said the criminal investigation was a further example of the sort of policy that prompted it to cut the US to its fourth-highest level in October, putting it on the same rung as France.

Eiko Sievert at Scope said: “This reflects one of the main negative drivers for the downgrade of the US sovereign rating to AA-.

“The legal action the central bank is now facing further intensifies the growing political and legal pressure from the executive branch on the independence and credibility of a key pillar of US governance.”

02:08pm

One of the contenders to replace Jerome Powell at the Federal Reserve has thrown his weight behind a criminal investigation into the chairman.

Kevin Hassett, a White House economic adviser, said he was not involved in conversations with the Department of Justice and did not know whether Donald Trump had personally approved the investigation.

However, he questioned Powell’s congressional testimony about the Fed’s renovation project, which is at the centre of the DoJ’s probe.

He told CNBC: “Right now, we’ve got a building that’s ⁠got ‌like, dramatic cost overruns ‍and plans for the buildings that look inconsistent with the testimony, but again, I’m not a Justice Department ​person. I hope everything turns ‍out okay for Jay.”

Hassett, who is one of four candidates to replace Powell when his term ends in May, added that he would support the investigation if he were in charge of the Fed.

He said: “[It] seems like the Justice Department ‌has decided that they ⁠want to see what’s going on over ‍there with this building that’s massively more expensive than any building in the history of Washington... And if I were Fed chair, I would want them to do that.”

01:41pm

Donald Trump will reportedly interview senior BlackRock executive Rick Rieder this week as a candidate to take over as chairman of the Federal Reserve.

The interview with Mr Rieder, who serves as BlackRock’s chief investment officer for global fixed income, will take place at the White House on Thursday, Fox Business reports.

Alongside Trump, chief of staff Susie Wiles, Treasury Secretary Scott Bessent and deputy chief of staff Dan Scavino will all be present.

Mr Rieder is among four candidates in the running to replace Jermoe Powell, whose term ends in May. Former Federal Reserve Board Governor Kevin Warsh, National Economic Council Director Kevin Hassett and Federal Reserve Board Governor Christopher Waller are also reported to be in the process.

01:22pm

The criminal investigation against the US Federal Reserve’s chairman “undermines confidence” in the central bank’s to battle inflation, a former rate setter has warned.

Eric Rosengren, a former president of the Boston Fed, said the legal action would probably be “highly counterproductive” as it would likely encourage Jerome Powell to stay on the Fed board after his term as chairman ends in May.

If he remains on the board, Mr Powell can continue to influence interest rate policy.

The political attack on the chair by threatening criminal prosecution is likely to be highly counterproductive. It likely only encourages the chair to stay on the committee after May. For inflation and affordability it undermines confidence in a low inflation rate fed policy.

— Eric Rosengren (@EricSRosengren) January 12, 2026

01:08pm

A rate setter at the European Central Bank (ECB) has said the legal action against Federal Reserve chairman Jerome Powell is a “political step”.

ECB Governing Council member Madis Muller said there was greater need for “autonomous development” amid the threat to the independence of the US central bank.

He said the subpoena against Mr Powell  “clearly seems a political step to me”, adding the relationship between the US and Europe had changed in recent years.

He said in Madrid: “Traditionally, we have always trusted the Americans more; I still trust the Americans more than China, but the need for autonomous development, I believe, is fundamental.”

12:37pm

Wall Street retreated in premarket trading after the ⁠Trump administration’s attack on the Federal Reserve, which revived concerns over the US central bank’s independence.

The administration threatened criminal charges against Fed chairman Jerome Powell over his Congressional testimony on a renovation project.

Mr Powell said the move was a “pretext” to gain more influence over interest rates, which Donald Trump has pressed to cut sharply since taking office in January last year.

Meanwhile, shares of lenders and credit card ‍firms slid after ‌Trump called for a one-year cap on credit card interest rates at 10pc starting on January 20.

Citigroup tumbled 4pc, JPMorgan Chase fell 3pc and Bank of America dropped 2.5pc in premarket trading.

This week also markets the beginning of fourth-quarter earnings season, beginning with JPMorgan Chase on Tuesday, after the S&P 500 and the Dow closed the first week of 2026 at ‍record levels.

Ahead of today’s opening bell, the Dow Jones Industrial Average was down 0.7pc, the S&P 500 fell 0.5pc and the Nasdaq 100 had fallen by 0.8pc.

12:05pm

UK and US-listed banks fell after Donald Trump called for a one-year cap on credit card interest rates.

The US president on Sunday reiterated his push for a 10pc cap on the interest rate on credit cards starting January 20 without providing details on how he planned to make the companies comply.

Shares of JPMorgan Chase and Bank of America , the top two US lenders, dropped 2.5pc and 2.4pc, respectively, in premarket trading. Citigroup fell 4.1pc while Wells Fargo declined 2.2pc.

In London, Barclays was the worst performer on the FTSE 100, with nearly £8bn wiped off UK-listed lenders at one point.

JP Morgan analyst Vivek Juneja said: “This rate cap would not address the root of the problem and could push consumers towards more expensive debt.

“It could push more ‍borrowing away ‌from banks into other unsecured loans such as pawn shops and other non-bank consumer lenders.”

11:15am

The US is at risk of a 1970s-style inflation crisis if the criminal charges against the Federal Reserve lead to “ultra-accommodative” interest rates for Donald Trump, economists warned.

Investors may shun US debt and are concerned that global inflation could soar if the independence of the Fed is eroded, Swiss private bank Berenberg said.

US economist Atakan Bakiskan said: “If the Fed pursues an ultra-accommodative monetary policy despite higher inflation, the result could resemble the 1970s in a worst-case risk scenario.

“Moreover, if the Fed acts on politics rather than data, foreign investors could pull back on financing the US debt and seek new safe havens.”

A Federal Reserve that lowers interest rates on the whim of the president could fuel inflation by making borrowing cheaper, which would boost spending and investment and increase demand for goods faster than supply, which would drive up prices.

Such a move also risks higher long-term borrowing costs as investors would demand a higher yield as collateral for funding US debt, and weaken the dollar as its spending power is eroded.

US Treasury bond yields – the return investors demand to buy US government debt – have risen slightly today.

Mr Bakiskan warned the market “may be too complacent”.

10:35am

Analysts think investors have “low confidence” that the next chairman of the US Federal Reserve will be independent after US prosecutors opened a criminal investigation into the central bank’s chairman Jerome Powell.

Money markets indicate the US Federal Reserve will cut interest rates two more times by the end of this year, starting once Mr Powell steps down as chairman in May.

Kathleen Brooks of XTB said financial markets had given a “thumbs down” to the latest move by the Trump administration.

“The markets could send a message to the President this week: an interventionist foreign policy is one thing, but interfering too much at home is not welcome. Get ready for the first bout of volatility in 2026.”

Susannah Streeter of Wealth Club added: “It certainly marks a sharp escalation in the Trump administration’s criticism of the Fed and is unnerving investors given that an independent central bank is considered to be crucial to maintaining sound monetary policy, especially at a time when the mounting US debt pile is coming under scrutiny.”

She said the dollar had fallen in an “indication of a fresh caution among investors about how US economic policy is playing out”.

10:08am

Threats to the independence of the Federal Reserve will be a key focus for investors this year, one of Wall Street’s biggest banks has said.

Jan Hatzius, chief economist of Goldman Sachs, said the issue of central bank independence is “a risk that is going to be relevant for markets” in the wake of Donald Trump’s attacks on Jerome Powell and Fed governor Lisa Cook.

President Trump attempted to fire Ms Cook last year alleging that she lied on a mortgage application before she became Governor.

Ms Cook has denied the claims and has said the attempt to remove her from the role of Governor is illegal. The Supreme Court will hear arguments over Trump’s attempt to fire her later this month.

Meanwhile, US prosecutors on Friday issued subpoenas to the US central bank over its $2.5bn (£1.9bn) renovation of its headquarters, a move which chairman Powell said was motivated by Mr Trump’s desire to influence interest rates.

“Clearly it’s going to have effects,” said Mr Hatzius at the Goldman Sachs Global Strategy Conference in London.

“From an investor’s perspective, obviously it’s going to be something that everyone’s going to be very focused on. Who is the next Fed chair going to be? What happens with the Trump administration attempt to fire Governor Cook?”

Referring to Ms Cook, he added: “We’ll find out to what extent the Supreme Court continues to push back against the attempts to subordinate monetary policy to politics.”

09:57am

The value of the dollar fell against major global currencies, including the pound, after a criminal investigation was opened into the chairman of the Federal Reserve.

The pound was up 0.4pc against the US currency to $1.345 while the euro climbed 0.4pc to $1.168. The Australian dollar rose 0.3pc against its Us counterpart and the Swiss franc strengthened by 0.6pc.

Melanie Baker, senior economist at Royal London Asset Management, said there was “a high level of concern that Federal Reserve monetary policy independence is under threat”.

She said: “The latest developments are in the context of Trump comments that the Fed Chair should consult him on rates, a general berating of Powell and the another legal case brought against the Fed Governor Cook for alleged mortgage fraud.

“Threats to monetary policy independence can have significant market and economic consequences.”

Royal London’s Trevor Greetham added: “Historically, the dollar has been a safe haven in times of trouble. With the US at the epicentre, investors are flocking to gold instead.”

09:44am

The independence of the Federal Reserve “is going to be under the gun” this year, according to economists at Goldman Sachs.

Speaking at the bank’s global strategy conference, Jan Hatzius of Goldman Sachs said: “Obviously there are more concerns that Fed independence is going to be under the gun with the latest news of the criminal investigation into chair Powell having enforced those concerns.

“I have no doubt, he in his remaining time as chair, is going to make decisions based on the economic data.”

Goldman Sachs expects the Fed to cut interest rates by another half a percentage point overall in 2026.

09:25am

Bank stocks were the worst performers across Europe after Donald Trump called for a one-year cap on credit card interest rates.

The US president said companies would be “in violation of the law” unless they brought down interest rates to 10pc and kept them there for a year.

He said on board Air Force One on Sunday: “Some of them are charging 28, almost 30pc. People don’t know they’re paying 30pc. They’re working and have no idea they’re paying 30pc.”

Barclays fell as much as 4.8pc to the bottom of the FTSE 100, hitting ‍its lowest in nearly a month, and HSBC dropped as much as 1.1pc after the US president said major lenders “really abused the credit cards”.

Investors also fled to safe-haven assets after Trump’s officials ⁠threatened to ‌indict Jerome Powell ‍over comments to Congress about a building renovation project.

Elsewhere, AstraZeneca dropped as much as 1.6pc in London after ⁠its secondary listing in New York lost its spot in the Nasdaq-100 index.

The FTSE 100 was last down 0.1pc.

09:16am

Stock indexes were down across most of Europe in early trading after US prosecutors issued subpoenas to the Federal Reserve.

The pan-European Stoxx 600 fell 0.3pc while the Cac 40 in Paris was down 0.5pc. The Ibex 35 in Madrid dropped 1.2pc and the FTSEMIB in Milan declined 0.6pc.

Frankfurt’s Dax bucked the trend with a 0.1pc rise as defence stocks made gains.

09:04am

In contrast to the turmoil in the US, China stocks climbed ‍to a fresh 10 year-high amid a surge in artificial intelligence companies.

The Shanghai Composite Index closed up 1.1pc to its highest since July 2015 after last week’s 3.8pc surge, which was its best performance in 14 months.

The blue-chip CSI300 Index closed 0.7pc higher and Hong Kong’s benchmark Hang Seng added 1.4pc.

China’s CSI Cloud Computing and Big Data Index jumped 7.8pc, while ‍the AI shares rose 4.2pc. Tech majors traded in Hong Kong advanced 3.1pc.

08:54am

US stock indexes look set for a sharp drop when trading begins in New York later today after US prosecutors opened a criminal investigation into Jerome Powell.

The benchmark S&P 500 was down 0.7pc in premarket trading, while the tech-heavy Nasdaq Composite was down 1.2pc.

The Dow Jones Industrial Average declined by 0.6pc.

After some geopolitical fireworks, Trump is now going after Fed Chair Powell. Wow!
Powell: "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the… pic.twitter.com/xSNE0Mbtw4

— jeroen blokland (@jsblokland) January 12, 2026

08:47am

The cost of government borrowing for the US rose as investors turned cautious on American assets after the subpoenas against the Federal Reserve.

US Treasury bond yields climbed in Asian trading hours as investors sold bonds, pushing up the returns that the American government has to promise buyers of its debt.

In a further sign of US market distress, the US dollar fell against major currencies. Usually rising bond yields would increase the value of a currency as buying that country’s debt offers better returns to investors.

Gerald Gan, chief investment officer at Reed Capital Partners, said the news of the criminal action against Jerome Powell “could once again propagate the ‘Sell America’ narrative”.

Andrew Lilley, analyst at investment bank Barrenjoey, ‍said: “Trump is pulling at the loose threads of central bank independence.

“The only reason that he’s taking these steps is that he knows that he’s not going to take control of the Fed, so he wants to exert as much undue pressure as he can.

“Investors won’t be happy about it, but ⁠it ‌shows actually Trump has no other ‍levers to pull.”

US 10-year Treasury bond yields were up two basis points to 4.19pc. UK 10-year gilt yields rose around a basis point to 4.38pc.

08:21am

Gold and silver hit record highs after as the US Justice Department threatened criminal charges against the chairman of the Federal Reserve.

The precious metals were up 2.2pc and 5.9pc, respectively, as Jerome Powell said the subpoenas issued to the US central bank on Friday were part of the Trump administration’s “threats and ongoing pressure”.

Saxo Bank analyst Ole Hansen said: “Gold and silver pushed to fresh record highs in early Monday trading after Trump and his administration intensified their attack on the Federal Reserve by serving it with DOJ subpoenas, fuelling concerns about central bank independence, inflation and safety of US bonds.”

He added that gold and silver were also being pushed higher by “tight” supplies and the “escalating unrest in Iran, where ongoing protests continue to challenge the regime and stoke geopolitical risk premia”.

08:16am

Reid Hoffman, the co-founder of LinkedIn, accused Donald Trump of attacking the independence of the Federal Reserve after US prosecutors opened a criminal investigation into the US central bank’s chairman.

Mr Hoffman said: “Question to all those who said Trump would be better for the economy: is attacking the Fed’s independence what you had in mind?”

Question to all those who said Trump would be better for the economy: is attacking the Fed's independence what you had in mind? https://t.co/sq2hgtfG9T

— Reid Hoffman (@reidhoffman) January 12, 2026

08:06am

The FTSE 100 edged lower at the start of the week as the criminal investigation faced by the Federal Reserve chairman hit the dollar.

The UK’s blue chip index fell 0.2pc to 10,100.82 as many of its internationally focused companies measure their earnings in dollars.

The domestically focused FTSE 250 declined by 0.1pc to 23,013.16.

07:59am Video

Jerome Powell said he had “deep respect for the rule of law and for accountability in our democracy” in a thinly-veiled swipe at Donald Trump after he was threatened with criminal charges.

In a video issued by the US Federal Reserve, he said “no one is above the law” but stated this “unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure”.

He said it was nothing to do with the Fed’s renovation projects or his testimony to Congress last June.

He added: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.

“This is about whether the Fed will be able to continue to set interest rates based on evidence on economic conditions or whether instead monetary policy will be directed by political pressure or intimidation.”

President Trump has repeatedly criticised Mr Powell, who he has nicknamed “Too Late” and described as a “numbskull” for failing to lower borrowing costs.

The US Federal Reserve cut interest rates three times at the end of last year. Money markets indicate it is likely to cut rates twice more this year, likely starting again once Mr Powell’s term as chairman ends in May.

Video message from Federal Reserve Chair Jerome H. Powell: https://t.co/5dfrkByGyX pic.twitter.com/O4ecNaYaGH

— Federal Reserve (@federalreserve) January 12, 2026

07:35am

Thanks for joining me. Gold hit a record high and the dollar fell after the chairman of the US Federal Reserve said the Trump administration had launched a criminal investigation against him. Read on for what you need to get up to speed.

1) Miliband ‘to miss net zero targets by 15 years’ | Cornwall Insight, an energy consultancy, warned the Energy Secretary has little practical chance of achieving his goal of a 95pc decarbonised electricity grid by 2030.

2) Jobseekers flood the market as companies lay off staff | The number of people seeking permanent work rose at its fastest pace in four months in December, according to a survey by KPMG and the Recruitment & Employment Confederation.

3) Trump’s $200bn scramble to save America’s housing market | But analysts warn Trump’s bond-buying plan will deliver little more than a short-term sugar rush of housing demand. And his strategy is a risky one that could push up house prices and overall inflation.

4) Starmer fails to get Canada’s backing over Musk AI row | Downing Street has been discussing a coordinated response with allies to X’s AI bot, Grok, which has been used to generate fake naked images of women and children.

5) Billionaire Labour donor pays himself £66m | Tom Morris, who is nicknamed “the richest Scouser to have ever lived”, received the payout from his company, TJ Morris Group, last year, according to newly published accounts.

The dollar slipped and Wall Street indexes fell in premarket trading after Federal Reserve chairman Jerome Powell said the Trump administration had threatened him with a criminal indictment.

Gold hit a record high as investors sought out safety as the escalation in hostilities between the Trump administration and the Fed ⁠stoked worries about the central bank’s independence.

The Swiss franc strengthened 0.4pc to nearly 0.80 per dollar and the euro was 0.2pc higher at $1.165. The pound rose 0.3pc to $1.344.

However, stocks appeared unperturbed by the action. In Asia, Hong Kong’s Hang Seng gained 1.2pc to 26,547.64, while the Shanghai Composite index jumped 1pc to 4,163.11 after reports that Chinese leaders were preparing more help for the economy.

Tokyo’s markets were closed for a holiday but in South Korea, the Kospi added 0.8pc to 4,624.79, while Australia’s S&P/ASX 200 gained 0.5pc to 8,759.40. Taiwan’s Taiex gained 0.9pc.

On Friday, US stocks hit records following a mixed report on the American job market, one that may delay another cut to interest rates by the Federal Reserve but does not slam the door on it.

Try full access to The Telegraph free today. Unlock their award-winning website and essential news app, plus useful tools and expert guides for your money, health and holidays.