U.S. prosecutors are now investigating Fed Chair Jerome Powell’s conduct in what critics view as an escalating confrontation over the central bank’s independence.
Summary
- DOJ has opened a criminal investigation into Fed Chair Jerome Powell.
- Powell says the probe is political pressure tied to interest rate policy.
- Lawmakers warn the case threatens Federal Reserve independence.
Federal Reserve Chair Jerome Powell has confirmed that U.S. prosecutors are pursuing a criminal investigation tied to his congressional testimony, a move that places the central bank in direct conflict with the executive branch.
In a video statement released on Sunday evening Jan 11, Powell said the Department of Justice had served the Federal Reserve with grand jury subpoenas related to his June 2025 testimony before the Senate Banking Committee.
Investigation centers on renovation costs
The testimony in question addressed cost overruns tied to a $2.5 billion renovation of the Fed’s historic headquarters and surrounding buildings in Washington, D.C.
According to Powell, the probe is examining whether he misled lawmakers about the scope and expense of the renovation project. The inquiry followed a referral from Republican Rep. Anna Paulina Luna, who accused Powell of making false statements to Congress.
The U.S. attorney’s office for the District of Columbia approved the investigation in November. Powell pushed back on the premise of the probe, arguing that Congress had been kept informed through testimony and public disclosures.
He said the renovation project was being used as a pretext, framing the investigation as retaliation for monetary policy decisions that ran counter to President Donald Trump’s demands for faster interest rate cuts.
“This is about whether the Fed will continue to set interest rates based on evidence and economic conditions,” Powell said, “or whether monetary policy will be directed by political pressure.”
Trump has repeatedly criticized Powell over interest rates and publicly questioned the scale of the renovation project. Allies of the president spent much of last year attacking the Fed’s handling of the upgrades, with Trump at times suggesting legal action.
Political pressure raises independence concerns
The investigation marks a sharp escalation in tensions between the White House and the central bank. The Trump administration has already moved to reshape the Fed’s leadership, installing a close ally on the Board of Governors and attempting to remove Governor Lisa Cook over unproven allegations.
Attorney General Pam Bondi said the probe is focused on accountability and the use of taxpayer funds. Trump, speaking in an NBC interview, denied directing the investigation but again criticized Powell as ineffective.
The move has drawn backlash from both parties. Republican Senator Thom Tillis warned that the investigation risks undermining the Fed’s independence and said he would oppose future Fed nominees until the matter is resolved.
Powell, who has served under four administrations, said he intends to remain in his role and continue carrying out the Fed’s mandate of price stability and maximum employment. “Public service sometimes requires standing firm,” he said, adding that the central bank must remain insulated from political intimidation.
