Monthly House View - February 2026 - Download here

From macroeconomics to central bank activity and geopolitics, 2026 is already shaping up to be  another year of surprises. In just a few weeks, we have witnessed a flurry of significant developments. US inflation continues to moderate, with core inflation at 2.6% and unemployment edging down to 4.4%. Meanwhile, geopolitical risks have returned to the spotlight, with Venezuela, Iran, and Greenland making headlines. Despite these challenges, the macroeconomic backdrop remains broadly supportive—even as tensions persist. However, the most consequential development is the unprecedented scrutiny facing the US Federal Reserve (Fed).

THE FEDERAL RESERVE UNDER ATTACK

In a highly unusual move, the US Department of  Justice has opened a criminal investigation into Fed Chair Jerome Powell, focusing on the 2.5 billion  dollars renovation of the Fed’s headquarters. The Fed’s response was equally historic: Chair Jerome  Powell addressed the nation, reaffirming that monetary policy decisions will remain grounded in economic evidence. Notably, he avoided referencing the word “independence”—a subtle but powerful signal of leadership under pressure.
The investigation centres on 700 million dollars in cost overruns compared to the original 2017 estimate. Though not renovation experts, we note that budget overruns have been widespread since post-COVID inflation. The Financial Times reported that Jerome Powell provided comprehensive responses to lawmakers’ questions before the Senate Banking  Committee, complicating the administration’s claims that Jerome Powell had misled Congress.

UNPRECEDENTED SUPPORT 

The immediate reaction was a remarkable show of solidarity: eleven central bank governors issued a joint letter expressing “full solidarity” with Chair Jerome Powell and underscoring that “the independence of central banks is a cornerstone of price, financial, and economic stability in the interests of the citizens we serve.” Jerome Powell, a long-standing  Republican, also received bipartisan support—most notably from Senator Thom Tillis of the Senate  Banking Committee, who threatened to block any new Fed nominations until the legal matter is resolved.
This situation could therefore backfire on the US administration, potentially resulting in significant political and institutional consequences. Chair  Powell’s term expires in May 2026, while his governorship runs until 2028. It is rare for a former Chair to remain on the Board, but in this case, Jerome  Powell may choose to do so to preserve the institution’s integrity. Until the situation is resolved, we expect the US dollar to remain vulnerable and long-term US government rates to stay elevated and volatile, reflecting higher inflation expectations and diminshed confidence in the current administration’s governance. Gold should continue to benefit, as central banks, institutional investors, and private clients seek diversification and alternative sources of return in an environment marked by uncertainty. 
What is clear is that the next Fed Chair will need to demonstrate true independence, with the Senate playing a pivotal role in the nomination process. The stakes remain high.

SOME WORDS OF WISDOM

Returning from Asia, I was reminded by a Feng Shui master at our Global Outlook presentation that 2026—the Year of the Fire Horse—symbolises boldness, transformation, and innovation. It is a time to seize opportunities, but also to avoid impulsive decisions. Success will require clarity, careful planning, and sound advice. In a world of constant change: “Stay grounded, remain flexible, and maintain a long-term vision” applies —especially in investments.
 

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