Federal Reserve Chair Jerome Powell is facing a criminal inquiry launched by the Justice Department, a move he publicly revealed Monday and which dramatically escalates tensions with the Trump governance [[1]]. The probe,reportedly spurred by disagreements over monetary policy and a $2.5 billion renovation project [[2]], raises serious questions about the independence of the central bank and its ability to operate free from political interference. Powell maintains the investigation is a pretext for pressure over interest rate decisions, warning of broader implications for the U.S. economy.
Federal Reserve Chair Jerome Powell announced late Monday that U.S. federal prosecutors have launched a criminal investigation into his conduct, escalating a conflict with the Trump administration that threatens the central bank’s independence.
The probe centers around approximately $2.5 billion in renovations to Federal Reserve buildings, but Powell indicated the investigation is rooted in disagreements over monetary policy. Specifically, the Trump administration has repeatedly pressured the Fed to lower interest rates at a faster pace than it has deemed appropriate.
In a video statement released via the Fed’s official X account, Powell stated the investigation followed the central bank’s decision to set interest rates “based on our best assessment of what will serve the public, rather than following the preferences” of the president. The Fed’s actions are closely watched by markets, and any perceived political interference could shake investor confidence.
Powell warned that the underlying issue is the independence of the institution. “This is about whether the Fed will be able to continue setting interest rates based on evidence and economic conditions, or whether monetary policy will be directed by political pressure or intimidation,” he said.
According to Powell, the Department of Justice notified the Federal Reserve on Friday with grand jury subpoenas “threatening criminal indictment” related to his testimony before the Senate Banking Committee in June. That testimony partially addressed “a multi-year project to renovate historic Federal Reserve office buildings.”
Powell emphasized his respect for the rule of law, stating, “No one, certainly not the chair of the Federal Reserve, is above the law.” However, he added that “this unprecedented action should be seen in the broader context of threats and ongoing pressure from the administration.”
He insisted the investigation isn’t directly related to the content of his testimony or the renovation project itself. “This new threat is not about my testimony last June, nor is it about the renovation of the Federal Reserve buildings. It’s not about Congress’s oversight role; the Fed, through testimony and other public disclosures, has done everything possible to keep Congress informed about the renovation project. Those are pretexts,” Powell stated.
The case was first reported by The New York Times, which noted the investigation is being led by Jeanine Pirro, the U.S. Attorney for the District of Columbia. Pirro, a former New York state prosecutor and Fox News host, was appointed to the position by President Trump.
The investigation comes amid repeated criticism from Trump of Powell, who the former president has faulted for not cutting interest rates as aggressively as desired since returning to the White House in January 2025. The ongoing tension highlights the delicate balance between political pressure and the Federal Reserve’s mandate to maintain economic stability.
Republican Senator Thom Tillis, a member of the Senate Banking Committee, rejected the investigation, according to CNBC. He warned he would oppose the nomination of Powell’s replacement, and any other candidate to the Fed’s board, “until this legal matter is fully resolved.”
“If there were any doubt that advisors within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should be none now,” Tillis said. He added, “Now it is the independence and credibility of the Department of Justice that is at question.”
Powell was originally nominated by Trump during his first term, and his current term as chair of the Federal Reserve is set to conclude in May.
